The ‘Rise of China’ has been hailed as the most important trend in the world for the next century, and with good reason. While Russia and much of Eastern Europe sink into depression, Deng Xiaoping’s market reforms have turned China into the fastest growing large economy in the world. Since 1978 China’s economy has grown by an average of more than 9 per cent per year, and since 1991 by more than 11 per cent. China’s swift growth has been largely propelled, like its East Asian nic predecessors, by exports. China now produces half the world’s toys, two-thirds of its shoes, most of the world’s bicycles, lamps, power tools and sweaters. Furthermore, China’s exports are increasingly being powered by high-end products. Exports of machinery and electronics jumped by 60 per cent in 1995, becoming China’s top export category for the first time. China is also the largest recipient of foreign investment after the United States. More than $35 billion in direct investment poured into China in 1995, a record. And, after years of deficits, China is now racking up trade surpluses with the us approaching those of Japan. In 1995 us officials estimate that, counting goods sent through Hong Kong, China ran up a trade surplus with the us of close to $38 billion, following a $30 billion surplus in 1994. Overall, China amassed a $20 billion global trade surplus in 1995. Even if China’s growth rate slows considerably, there can be no doubt that early in the next century China’s gnp will inexorably march past that of the us, and China will once again, after a five-hundred-year hiatus, reclaim its place as the centre of the world economy, heralding the ‘Asian Century’.footnote1

China’s phenomenal economic growth has, moreover, been accompanied by an unprecedented rise in real incomes and living standards. Indeed, Deng’s reforms have arguably brought the greatest one-off rise in living standards for the greatest number of people in all of human history. Since 1978 the government claims to have reduced the numbers of Chinese living in abject poverty—those with cash incomes of less than $38 per year—from 250 million (then one-third of the population) to about 80 million.footnote2 From 1978 to 1994 the annual net per capita income of peasant farmers more than tripled, to $146; urban net incomes in the state sector more than doubled, to $380. This has meant, first of all, that people eat better. Since 1978 per capita grain consumption has risen by 21 per cent, seafood consumption has doubled, pork consumption has increased by almost two and a half times, egg and poultry consumption has quadrupled.footnote3 People are also better housed—both urban and rural per capita housing space has doubled since 1978. And they enjoy more consumer goods. Whereas in the 1960s and 1970s, Chinese households considered a wrist-watch, a radio set, a bicycle and a sewing machine to be the major items of private property—the ‘four big belongings’—by the mid-1980s and 1990s these included more expensive high-tech goods: a colour television, refrigerators, tape recorders and automatic washing machines. Today, Chinese yearn for air-conditioners, video recorders, motorcycles, and some even dream of the ultimate status symbols—a private car and a house.footnote4

China’s economic miracle has, predictably, induced a giddy euphoria among Western editors, economists and academics for free markets, economic individualism and mass consumerism. The New York Times gushes ‘There is not an adjective that soars high enough or detonates with enough force to describe China’s economic explosion or the promise of its future. One-fifth of humanity, for decades locked in the dungeon of Mao Zedong’s proletarian revolution, where they were whipped and exhausted by meaningless mass movements, are now fully unleashed in an epic pursuit of material wealth. . .The Chinese are buying, building and consuming as if there were no tomorrow.’footnote5In a survey celebrating the rise of ‘middle-class Asia’, the Economist’s editor gazes with confident satisfaction at the prospect of the biggest consumer boom in history:

It is now likelier than not that the most momentous public event in the lifetime of anybody reading this survey will turn out to have been the modernization of Asia. . .By 2000, Asians are expected to account for 3.6 billion of the world’s 6.2 billion people. Fully 1 billion of those Asians—not much less than the entire population of the Americas and Western Europe in 1995—will be living in households with some consumer-spending power; they will be able to buy at least basic goods such as colour televisions, refrigerators and motorbikes. Perhaps 400 million of those consumers—three times as many as in the early 1990s—will have disposable incomes at least equal to the rich-world average today; they will be buying houses, cars, holidays, health care, and education. . .The zooming growth and absolute size of Asia’s middle class should therefore create some of the biggest business and financial opportunities in history, and far-sighted Western firms and their workers stand to profit immensely from this.footnote6

Indeed, in the current climate of free-market delirium, enthusiasm for China’s market reforms extends even to many on the Left. Born-again post-Maoist China scholars now discourse about entrepreneurship, market efficiency and rationality. Marxist philosopher John Roemer applauds China’s market-oriented township and village industries (tves) as models of ‘egalitarian’ ‘market socialism.’ And Paul Bowles and Xiao-yuan Dong writing in the pages of nlr assert, without irony, that ‘China is not simply a case of successful state-led development, it is an example of successful socialist state-led development.’footnote7

What’s wrong with this shining image of market capitalist or, if you prefer, market socialist, beneficence? First, China’s economic miracle is less than brilliant for the millions of China’s unemployed camped in train stations, public parks, and shanty-towns that have sprung up around China’s cities. For the same market forces that are generating China’s ‘zooming growth’ are also producing the largest pool of unemployed workers in human history. Of the 440 million rural farm workers in China, some 120 million rural peasants—equivalent to the combined total population of Britain and France—are unemployed. Many of these comprise a vast ‘floating population’ (liudong renkou) of migrant drifters who sweep back and forth across the country in search of work. These drifters—impoverished farmers, environmental refugees from desiccated farms, workers laid off from bankrupt rural collective enterprises—scrounge a living from temporary work, begging, prostitution, and crime. Their children are sometimes turned out onto the streets to fend for themselves. In 1994, unicef estimated that there were at least 200,000 homeless street-urchins between the ages of four and eleven roaming the streets of China’s cities, sleeping in alleys, under bridges, in cardboard boxes, surviving by begging and stealing.

Chinese authorities estimate that the pool of surplus rural migrants may swell to 200 million or more by the turn of the century—almost a fifth of China’s present population. In addition, officials say between 20 and 50 per cent of the 160 million urban workers are redundant, and many more of these will face lay-offs as state industry shrinks. Officially, the urban unemployment rate is only 3 per cent. But another 25 million urban industrial and government employees are classified as xia gang or ‘off post’. They no longer report to work but still receive a portion of their former salaries and still have government housing. The International Labor Organization estimates that if these are added to those officially unemployed, the real rate of urban unemployment is more like 17–20 per cent. In Tianjin, a city dominated by state industries, the ilo says the figure is about 34 per cent. Most of the unemployed subsist on benefits of less than $10 a month. Though most still have company housing, on this income many cannot adequately feed themselves or their families. China’s booming rural industrialization sopped up some 110 million surplus farm workers in the last decade and a half. But rural industrial growth has levelled off and now seems unlikely to be able to absorb much more labour power in the near future. Furthermore, despite the torrid growth of the Western joint-venture capitalist firms in the special economic zones, these firms directly employ not much more than seven million workers. In short, China’s economy is growing fast, but it is not growing fast enough to provide jobs for the hundreds of millions of surplus rural farmers, the millions of urban workers facing redundancy, or to account for the inexorable push of population growth which is adding 15 million new youths to the work-force each year. One Chinese sociologist predicts that by the end of the century, 250 million people in China will be unemployed—a number almost equal to the entire population of the United States. They, at least, will not be buying houses, cars, and foreign holidays.footnote8