When
the process of capitalist restoration in China started, some 30 years
ago, Deng Xiaping issued the slogan “to get rich is glorious” and he
added “let some get rich first”. And some have certainly gotten themselves obscenely rich.
The destruction of the planned economy in China has created a
massive and widening gap between rich and poor and at the same time a
deep seated hatred against the new rich. According to a report in China Daily,
a recent survey released by the Zhejiang Academy of Social Sciences
found that “96 percent of the public said they feel resentful toward
the rich.”
survey shows that 70 percent of respondents feel that there is a “big
gap” between the rich and the poor in China today. Despite all the talk
by government and “Communist” Party officials about the building of a
“harmonious society”, more than half of the people feel that the gap
will only become bigger.
Interestingly the reason why the new rich are so disliked in China
is because of the generalised perception that they made their wealth at
the expense of the poor, by looting formerly state owned property,
through corruption and by having political connections (guanxi) rather than by their own hard work.
Yi Zhao, a civil servant from Guangdong province, is quoted by the China Daily article as saying:
"Most of them collect wealth at the expense of the poor. Take those
real-estate manipulators for example. They control the property market
aiming for a higher price and a considerable profit. On the other hand,
I simply can’t accept the skyrocketing prices. Isn’t it unfair to the
majority who are unable to afford an apartment, even if we squeeze
together the savings of three generations?” (Rich getting richer, but poor becoming resentful, Wu Yiyao, China Daily, December 10, 2009)
The Chinese press has been forced to report on this mood of anger
against the new elite. The Mandarin phrase, "fen fu," or to hate the
rich, has been coined in recent months to capture the public’s bitter
resentment.
Many of the new rich are not necessarily keen to give details about
their ill-gotten wealth. However, a survey conducted by China Merchants
Bank and Consultancy Bain & Company in 2009 indicated that by the
end of that year as many as 320,000 Chinese individuals would possess a
minimum of 10 million yuan (US$1.46m) each in disposable assets. A
total of 8.8 trillion yuan in disposable assets held in the hands of a
handful of rich individuals is already equivalent to 29 percent of the
country’s GDP of 30 trillion yuan.
In a separate study, Money Week, a weekly magazine under Nanfang Daily,
released a list of the top 3,000 wealthiest families in China last
year. The list shows the total assets of these 3,000 families reached
1.69 trillion yuan ($249 billion), and the top 10,000 rich families
have average property worth 200 million yuan in China.
The numbers of the Chinese super-rich have gone through the global
economic recession almost unchanged, and China now has more known
dollar billionaires than any other country in the world with the
exception of the US. According to the Hurun report there are 130 dollar
billionaires in China to the United States’ 359. “China’s rich are
getting richer, with the average wealth on the list [of] $571 million,
up almost one-third from 2008”, said Hurun list compiler Rupert
Hoogewerf.
Confirming the widespread perception that many have made their
fortunes through insider knowledge and political connections, the
report said that “one third of the people on the 1,000-name rich list
are estimated to be members of the Communist Party of China.”
A more recent poll conducted by the official Peoples’ Daily
underlined this point, revealing that “91 percent of the respondents
think all rich families have deep political backgrounds”. For 74
percent of those polled, the key to success for these millionaires is
"being good at networking with officials" while only 16 percent think
"wisdom and hard work of family members" are the reason for their
success.
The same poll showed that “86 percent are concerned about the close
relationship between entrepreneurs and officials in China, doubting
whether this rich group could have accumulated its wealth if there were
no links with officials.” The poll suggested that 69 percent of people
think "badly" or "really badly" of the newly rich families in China,
while only 3 percent said their impressions of the group are "OK" or
"very good".
The reasons people gave for having a bad impression of these new
layer of rich were very significant: for 79 percent the reason was that
“they are involved in power-money deals”, followed by 48 percent who
think this group has failed to shoulder its social responsibility, and
40 percent who think the group is rich but immoral.
The situation is aggravated by the brazenness and stupidity with
which these new rich upstarts flaunt their wealth. The official
broadcaster CRI, in a report entitled “Don’t hate the rich unjustly”
reported the outraged caused by a hotel owner from Dongguan, in
Guangdong Province, who had flown “his family to an island on his
private helicopter for a two hour swim”.
Everything is for sale, from prospective brides…
Another indication of the emergence of a new layer of super-wealthy
individuals is the growing market for luxury goods, from expensive
cars… to prospective brides! Yes, there is an on-line dating site which
caters specifically for the very particular needs of the obscenely
wealthy rich singletons. Membership of the Golden Bachelor “Diamond
Love” costs 300,000 Yuan ($44,000). Its website states in Chinese the
qualifications for joining: “a personal or family wealth of at least 2
million yuan ($292,000); a background that is extremely superior,
wealthy and aristocratic; very good personal qualities or young,
talented and beautiful.”
Golden Bachelor claims to have 5 million registered members and
according to a CNN report it throws lavish matchmaking parties. One of
these “bride markets” was held on December 20 in Beijing in a luxury
hotel. “The ticket price was 100,000 yuan, ($14,600); 21 single women
and 22 single men attended. Ladies took part in a wedding gown show and
also sang, danced, even cooked for their moneyed suitors during a
talent program.” But it was money well spent as “eighty percent of
those who came found a date, according to the company.
… to health care
To add insult to injury, even though millions have been lifted out
of poverty, the restoration of capitalism has also meant the
destruction of the social protection network which existed under the
planned economy, leaving millions of workers and poor without any
protection.
A recent article in the Los Angeles Times described the
situation of a health service run on a capitalist profit making basis.
The description will sound familiar to millions of people in the United
States: “Patients with good health insurance or ample savings can get
first-class treatment at the best medical facilities, while millions of
the uninsured and poor live in dread of a serious illness that could
bankrupt their families. Hospitals are focusing ruthlessly on the
bottom line to stay afloat. Costs are soaring, in part because of
perverse incentives that encourage doctors to prescribe pricey drugs
and needless tests.”
In a capitalist system, everything is for sale, as the Chinese
masses have had to learn the hard way. The article continues: “the
surge in demand feeds a black market for medical care. Packs of
scalpers roam China’s major hospitals, peddling appointment tickets for
hundreds of dollars ‑ equivalent to months of earnings for a typical
peasant. Despite crackdowns, these hustlers operate freely outside
Beijing Union’s registration hall. "Dr. Tang. Dr. Tang. Who wants a
ticket for Dr. Tang? Rheumatology and immunology," a man repeated to
passersby one evening in plain sight of guards. Other scalpers passed
out handwritten business cards promising appointments with any
physician.”
Tens of thousands of patients from rural areas, where the health
service has broken down, have to gather their meagre family savings,
perhaps accumulated by family members working as migrant labourers in
the coastal areas, and make a long journey to the big cities in the
hope of getting medical care.
This is the scene that faces them when they arrive at a hospital:
“Hundreds of patients and family members filled the hall, a dimly
lighted space about the size of a tennis court. Each evening it turns
into a campsite. A woman from a coal town seeking an appointment with a
liver specialist dozed on a pile of jackets. A janitor sat on a copy of
the Beijing News, holding a place for his cousin with kidney problems.
Many in line passed the time by playing cards, knitting or dozing. When
people needed to use the toilet or run to buy food across the street,
neighbours in line held their place.”“Nie, who traveled 250 miles from Inner Mongolia by train, was lucky
to be first in her line, boosting her odds of getting an appointment
with one of the hospital’s coveted medical experts. But even that was
no guarantee. Patients with pull ‑ and plenty of cash ‑ don’t bother
with queues. Scalpers who line up as if they were patients or collude
with shady registration clerks snatch up many of the slots and sell
them to the highest bidder.” (Want to see the doctor in China? Be rich, DAVID PIERSON Los Angeles Times, February 14, 2010)
The emergence of an “upper class”
"In recent years, the huge gap between rich and poor has become an
indisputable fact in China," Li Wei, director of the social development
department at the Chinese Academy of Social Sciences (CASS), said to China Daily
in June 2009. According to the Blue Book on Chinese Society by the
CASS, the average income of 20 percent of the richest Chinese families
was 17 times higher than the poorest households in 2009.
Li described this group as an “upper class”. "I agree that there is
such an elite group in China," he said, "wealth is just one of the
entry passes into high society and only a small number of people with
wealth, social status and power can be called the upper class." And he
explained the composition of this “upper class”: “Most of them are
business tycoons in both private and State-owned enterprises, as well
as a number of powerful officials.”
But Li seems to think that this is a normal and inevitable process:
"This social differentiation is inevitable in China because of economic
development. It can be a stimulus for social development as long as
every one has equal access to wealth." The problem is precisely that only a small minority have had access to the majority of wealth created.
Li Hongmei, a regular columnist for the official Peoples’ Daily
went even further and advocated the need for the state to have a
pro-active policy to eradicate the very idea of equality from the minds
of Chinese workers and peasants.
“The general public seems to grudge accepting the fact that a rising
number of high net worth individuals have emerged and the wealth they
controlled has been dramatically expanded. Influenced by the
decades-long planned economy, the Chinese have been accustomed to the
Chinese-style egalitarianism, shaping the stereotyped mindset of
‘eating from the same big pot.’ Hence, a great many people cannot rub
off the deeply ingrained prejudice against wealth, as they were taught
that there was something wrong inherently with being rich. (…) they
tend to form an abnormal psyche of ‘hating the rich.’”
Li was in fact making a very important point. Most of the times, the
rule of Capital is not enforced through naked and open violent
compulsion, but through the force of habit and custom. In no capitalist
society do capitalists become wealthy through their own hard work, but
rather by appropriating for themselves the fruits of the labour of
others. But, in normal times, most of the people consider this to be
“normal” and do not question it. Such habit and custom has not yet been
fully established in China in the transition from a classless society
to an extremely unequal capitalist society. Millions of workers and
peasants still consider that the country belongs to them in one way or
another and that public ownership belongs to all and therefore do not
naturally accept that a handful of corrupt officials and their friends
and relatives are becoming rich through the robbery of state property.
Hong Kong academic Wang Shaoguang also talks about the role of the
state in destroying what he calls “the moral economy of the socialist
state system”. “In order to create a market economy” he wrote in an
article in China Reflected in 2003, “the ‘moral economy’
needs to be destroyed and a new ethic needs to be cultivated or
imposed, something which will probably provoke protests against the
market. Therefore, the development of the market requires a prolonged
process of ‘legitimisation’, with the support of the shield of
coercion”. And this is precisely the role that the Chinese state
institutions are now playing: defending and enforcing the new property
relations.
Hatred of the new rich, Li Hongmei admitted, is widespread: “Such
terms as ‘corrupt rich,’ ‘stinking rich’ and other much harsher things
are often used by ordinary Chinese to describe those ‘wealthy but bad
guys’ in their eyes.”
Li acknowledged that the obscene behaviour of the new rich was
partly responsible for this mood: “Misconducts of some affluent people
as well as the illicit channels they used to accumulate their wealth
will undoubtedly add a further irritant to the discontent of the less
fortunate.”
But his conclusion was that what was needed was… to fool the people!
“In a society with the rapid economic growth and increasingly enlarged
circle of affluent individuals, it is quite desirable to cultivate a
wealth culture, which can, for one thing, gradually change people’s thought process and make them believe everybody can escape poverty and get rich through efforts.” (Don’t hate the rich, be one of them, April 02, 2009 Li Hongmei, People’s Daily Online)
Faced with this groundswell of public opinion, some of the
staunchest defenders of capitalism in China are forced onto the
defensive and attempt to justify themselves… by pointing out that it is
not just private “entrepreneurs” that are thieves. Cai Jiming,
director of the Center for Political Economy at Tsinghua University
explained to China Daily that many amongst “this class
included not only rich families on various fortune lists, but also many
unknown rich people, like bosses of State-owned enterprises, who are
getting rich by using the country’s monopoly in some industries or
abusing public rights.”
“I think problems in this field are more dangerous, and need tighter
supervision. While for the private entrepreneurs, I believe they need
more guidance, but generally speaking, the booming of the private
economy is doing much more good than harm to the nation,” said Cai.
(February 9, 2010, China Daily)
But, just who is this Cai Jiming who is so keen to provide a
justification for Chinese capitalism? As well as being a “respected”
academic he is also a member of the National Committee of the Chinese
People’s Political Consultative Conference (CPPCC), the nation’s top
political advisory entity.
But he is, of course, right; Chinese capitalism is not only the
private capitalists which have emerged from nothing (with a bit of help
from friends, connections and bribes), but also those who are the
bosses and managers of State Owned Enterprises which they use for their
own private gain.
A very perceptive article by John Garnaut in the Sydney Morning Herald
described how far SOEs have moved from the days of planned economy.
“China’s state-owned enterprises (SOEs) are more competitive with each
other and less beholden to central command than outsiders often think.
But there’s another web of incentives that can override those corporate
interests: the private interests of officials who control them.”
He then proceeded to describe the business dealings of an
acquaintance of his, identified by the nickname “Lee” whose friend has
a lot of guanxi, connections with state and Party officials.
“Lee’s most reliable money-earning trick is flying to Tianjin to solve
congestion emergencies at nearby Qinhuangdao port, where tankers are
lined up to load coal from northern China and ship it down south.
Delays can cost hundreds of thousands of dollars per day.”
"My friend uses his dad’s connections to persuade the port authority
to allow particular ships to load," says Lee’s business partner. "Ships
would rather give the money to my friend and the port officials than
waste it out at sea. If they don’t pay a ‘bonus’ then there’s no way
they can load their stuff in time. That’s why port officials can earn a
BMW per day if they want to, or at least one per week. And that’s why
smaller or foreign companies can’t make money because there’s no way
for them to get their ships loaded efficiently and cleared to leave."
And Garnaut noted that “the same system works at congested Chinese
airports. An official report last week suggested Beijing air traffic
controllers were receiving kickbacks from executives at the state-owned
Air China in return for preferential landing rights.”
This is not just the old corruption engendered by a bureaucratic
regime, but a qualitatively different phenomenon in which managers of
state owned companies, party officials and private capitalists become a
single continuum of individuals interested in their own private gain in
an economy run on the basis of profit. The majority of Chinese, quite
rightly, intensely hate those who have benefited from the rise of this
particularly nasty kind of state-led capitalism.
The current leadership of the Chinese “Communist” Party is acutely
aware of that, and they know that if they are not able to maintain a
certain level of economic growth, all this anger will raise to the
surface in the form of a mass movement which would threaten their
power, wealth and privileges. This is why, on the one hand they pursue
economic policies which only serve to further pile up contradictions
(in the form of massive overcapacity and speculative bubbles), and at
the same time attempt to introduce some sort of welfare network which
can alleviate the social contradictions created by the restoration of
capitalism. This is the real meaning of all the talk about building a
“harmonious society”: an attempt to introduce reforms from above to
prevent a revolutionary explosion from below.
