‘Gangster capitalism’ and peasant protest in China: The last twenty years

This article first reviews the alliance of money and power in post-socialist China, arguing that it has generated a peculiar form of the (so-called) primitive accumulation of capital–'gangster capitalism' – based primarily on a plundering of public wealth by power-holders and their hangers-on. It then examines the tidal wave of peasant protest in China over the last twenty years. It analyzes this rural social movement, however, as not simply a reaction to the power of the market, but also an independent elaboration of community, articulation of socialist/non-capitalist vision, and critique of urban-centered development. Notes 1 I borrow the term 'gangster capitalism' from Nancy Holstrum and Richard Smith Citation2000 who first used it in their comparative analysis of post-socialist China and Russia. 2 From 1981 to 1991 annual average growth stood at 10 percent and from 1991 until 1995 at 12 percent, after which it dropped to about 7 percent [Liu and Link, Citation1998: 17]. Paralleling this growth, average personal incomes tripled in the 1980s and then doubled again in the first half of the 1990s [ibid.] 3 This policy, known as the 'Household Responsibility System,' was first introduced in 1978 on a voluntary basis, but when many communes opted to maintain their collective structure instead of privatizing, the government, in 1980, made disbandment compulsory. Under this pressure, by 1983 only about 2 percent of rural production remained truly collective [Hart-Landsberg and Burkett, Citation2004: 34]. 4 Several factors contributed to this contraction and reversal: first, the immediate gains stemming from the return to labor-intensive family farming could not be sustained; second, the state lowered procurement prices for quota commodities while input prices rose; and third, many TVEs, the profits from which were supposed to help subsidize agriculture, fell victim to de facto private ownership, extortion, over-taxation, embezzlement, and other forms of corruption engaged in by local officials; in the case of joint ventures, control by foreign capital also became commonplace [Greenfield and Leong, Citation1997: 107–8; Hart-Landsberg and Burkett, Citation2004: 34; 40]. 5 By 2000, according to government statistics, fully 230 million of China's 900 million rural dwellers were attempting to survive on annual incomes of 950 yuan or less; that figure represents less than one-third of the international poverty standard of a per capita annual income of 3,000 yuan [Li Congguo, Citation2003: 2]. 6 The 'ideology of peasant backwardness' has thus underpinned the claims of new capitalist elites, modernist intellectuals, and post-socialist state functionaries to an inherently superior, privileged position in national economic, political, and cultural life [Cohen, 1993: 155; Zheng, Citation1999. As such, it resembles closely the nationalist discourses of elites in early twentieth-century China (on the early anti-peasant discourse, see, for example, Walker Citation1999 and Cohen 1993). Along with state spokespersons and agencies, popular urban and intellectual writings have helped to frame and disseminate the contemporary discourse. Some of these writings contend that China's stagnation in the feudal stage of history was due precisely to 'peasant backwardness.' Others suggest that the poorer rural areas of China are still underdeveloped because the 'feudal consciousness' of the peasants prevents proper market mechanisms from working [Cohen, 1993: 166; Kipnis, Citation1995: 119]. Thus according to one popular television series of the 1990s: In the vast backward rural areas, there are common problems in the peasant make-up such as a weak spirit of enterprise, a very low ability to accept risk, a deep psychology of dependency and a strong sense of passive acceptance of fate. No wonder that some scholars sigh with regret: faced with the [psychological] make-up of people such as this … even if a great economist like Keynes were to come back to life, what could he do about it? It's not the lack of resources, nor the level of GNP, nor the speed [of development], but rather this deficiency in the human make-up that is the essence of … 'backwardness.' And the decline of the make-up of the general population is caused precisely by the rapid increases in its numbers. This truly is an agricultural civilization caught in a vicious cycle. Do we still have any reason to praise or to be infatuated with it [Bodman and Wan, 1991: 169–70]? 7 In this article I have focused on internal developments, but clearly global capitalism has both provided the framework for and to a significant degree shaped those developments. This process has involved not only the fusion of local and foreign capital interests; the state itself has been transformed by its drive to attract foreign capital. The relationship between the TVEs and foreign capital is one illustration. Proponents of market socialism usually assume that the interests of foreign capital cannot determine the conditions of production and distribution in enterprises such as TVEs. In point of fact, however, as Gerard Greenfield and Apo Leong Citation1997: 108] outline, most joint ventures between TVEs and foreign capital have boards of directors on which the foreign partner is dominant, or they are based on agreements that grant strategic control to foreign capital. Local political authorities, including the local party secretary, also often derive a direct income from joint ventures, thereby guaranteeing a partnership of interest between the local state and foreign capital [Greenfield and Leong, Citation1997: 108]. Aside from the direct linkages of joint ventures and subcontracting, local governments have also restructured to facilitate the influx and expansion of foreign capital. From the late 1980s on, this restructuring frequently involved the confiscation or buying up at low prices of farmland and its conversion into industrial use – a process that, as our examination will highlight, at once contributed to the rise of a rural protest movement and deepening of rural poverty [Hart-Landsberg and Burkett, Citation2004: 39]. Thus for the Beijing authorities, as Arif Dirlik Citation1994: 59] suggests, 'the recognition of the local in marketing strategy does not mean any serious acknowledgement of the autonomy of the local but is intended only to incorporate localities into the imperatives of the global'. 8 He Qinglian's book Zhongguo de xianjing was first published in Hong Kong in 1996 and reissued in Beijing in 1998 under the title Zhongguo xiandai hua de xianjing. It has been translated under the title China's Descent into a Quagmire in four separate issues of The Chinese Economy (see He Qinglian Citation2000; Citation2001a; Citation2001b; and Citation2002). Liu Binyan and Perry Link Citation1998 have also authored an excellent review of the book, the title of which they translate as China's Pitfall. They speculate that Chinese leaders permitted its publication because of their need – in the face of growing popular unrest – to disassociate themselves from corruption and related trends. 9 He Qinglian provides a number of illustrations of how the embezzlement of state property occurred, including, for example, local cadres giving away as gifts to government officials so-called power shares (quanli gu), in return for their willingness to authorize the formation of a shareholding company in order to make cheap land and materials available [He Qinglian, Citation2000: 45]. 10 He Qinglian argues that personal fortunes were easily made with only minimal capital investment, a process popularly referred to as 'going from nothing to something' (yi wu bo you). As she states: 'The process was simple: find some government officials with the appropriate power and decision-making authority, acquire the 'red-lined map' by making the necessary bribes, and then approach officials from the finance sector and make additional bribes so as to secure the loans to finalize the deal. In no time flat, these people became fabulously wealthy, simply by relying on relatively small-time tricks and tactics' [He Qinglian, Citation2000: 81–2]. In the case of acquiring a tract of rural land for gain (i.e., the 'red-lined map'), typically all personnel in the administrative hierarchy were bribed – from the village cadres and land managers to the appropriate authorities at the district, township, county, and municipal levels, and in construction bureaus [He Qinglian, Citation2000: 64]. 11 At the close of 2004 Merrill Lynch estimated that there were 236,000 millionaires (in terms of U. S. dollars) in China – more than in Russia and India combined [Barboza, 205: 1]. 12 The rate of exchange is 1 Yuan = 0.12 US$ (or US$1 = 8.05 Yuan). 13 Deng's public pronouncements, as Liu Binyan and Perry Link so aptly note, 'led virtually every official, government office, … and organization in China to "jump into the sea" and try to make money … the most lucrative means [of which] were usually exploitative or illicit' [Liu and Link, Citation1998: 18; see also Chu, Citation1999a: A1]. 14 He Qinglian cites a variety of means through which this transfer of ownership was effected (see, especially, He Qinglian Citation2001a: 33–43]). In many cases fallacious mergers and/or fake bankruptcies were executed so as to free the newly established firms from the accumulated debts of the older ones. In this organizational shell game, as she explains, 'all outstanding debts and obligations were retained by the original state-owned enterprise, while the new "reorganized" firm inherited the productive assets, technical know-how, and skilled labor, avoiding both debt payments and the start-up costs of forming a completely new enterprise' [He Qinglian, Citation2001a: 10]. 15 Because Chinese banks announce only part of their bad debt publicly it is difficult to determine the actual figure for non-performing debts. In 2003 the rating service Standard & Poor estimated that 50 percent of all loans outstanding from China's banks are non-performing, roughly equivalent to US$500 billion. The service also estimated that based on the pace of reforms, it could take the banks more than two decades to reduce their bad-debt levels to about 5 percent – a figure that would still be above the preferred 3 percent or lower ['Banks Sink Deeper', Citation2003: 24]. 16 It is really only in the context of this financial quagmire that China's entry into the World Trade Organization in 2001 – and with it the possibility of financial bailout from advanced capitalist partners – can be fully comprehended. In 2003, for example, the state-run China Construction Bank finalized an agreement with the U.S. investment bank Morgan Stanley to set up an asset-management joint venture to handle 4.3 billion renminbi (US$519.3 million) of the Chinese bank's nonperforming loans (this agreement extended the range of asset-management companies that had been established in 1998–99 to dispose of 1.4 trillion renminbi in non-performing loans) ['China Briefing: Bad Loans', Citation2003: 26; Shih, Citation2004: 939–42]. Adding to the Construction Banks problems, in 2003, as well, China's National Audit Office uncovered a 1 billion renminbi (US$120 million) fraud case in the mortgage-lending business of the bank ['Banks Sink Deeper', Citation2003: 24]. 17 In 1978 the traditional statistical measure of the gap between rich and poor, known as the Gini coefficient, was 0.16 for China – the lowest in the world. As early as 1994 it had already moved to 0.445 for China's urban areas and townships, which placed these areas well above the international average of 0.3 to 0.4 [He Qinglian, Citation2001b: 43]. The 1994 figures reflected the growing divide between urban and rural areas. Statistics released in January 2005 show that China now also has one of the biggest urban-rural divides in the world, with urban incomes averaging 3.2 times those in the countryside [Kahn, Citation2005: 3]. 18 The urban/industrial actions include a reported 135,000 labour disputes in 1994; 25,000 strikes involving 450,000 workers in 1995; and by 2004, 224,715 'civil disturbances.' Some have involved large numbers of participants, such as the demonstration by 40,000 miners and their families in 1996 and the massive protest of tens of thousands of former oil industry employees in Heilongjiang Province in 2002 [Albright and Kunstel, Citation1999: A11; Greenfield and Leong, Citation1997: 97; 115; 'Highlights: PRC Civil Disturbances', 2004.12.23; Weston, Citation2004: 67]. 19 Given this situation, not infrequently hundreds or even thousands of petitioners from various parts of the country have converged outside the offices of state authorities in Beijing. By late 2004, viewing the problem as having become acute, the central government established a new committee to deflect petitions back to lower administrative levels and, thereby, steer petitioners away from Beijing [Cai, Citation2004.12.3]. 20 In a pattern that is strongly reminiscent of the early Republican state, fees and taxes have been imposed for just about everything: buying pigs, selling pigs, building new roads, removing old roads, on the land, on the right to water the land, etc. In many instances, no reasons have been given, just lump-sum amounts listed as a 'farming tax' or some other vague designation [Chu, Citation1999b: A1]. 21 On the other hand, there is also ample evidence of cadre participation in a large number of incidents and risings, that is, of 'non-corrupted' cadres whose outlook and worldview still resonate or coincide with that of the protestors. See, for example, Bernstein Citation1994: 63–4], Thornton Citation2004, and Zweig Citation1986: 3]. 22 See below for further discussion. 23 In 1993 Qiao Shi, chair of the National People's Congress, cited, for example, the growing influence of one 'peasant emperor' in Hubei who had gained the allegiance of peasants from four surrounding villages (presumably those comprising the local township) ['Rural unrest', 1993: 6]. 24 Thomas Bernstein makes a similar point. He suggests as well that the coordination and outbreak of simultaneous protests stretches the government's ability to handle or control them [Bernstein, Citation2000: 108]. 25 Following a slow start, in the 1990s both peasant interest in and the quality of village elections appears to have increased (for discussion, see O'Brien Citation2001: 418–19], Shi Citation1999: 394, 402], and Unger Citation2002: 218–22]). At the same time, complaints from villagers to higher authorities about abridgements of their electoral rights increased [Shi, Citation1999: 403–4]. Especially after the revision of the Organic Law, the election process also appears to have surfaced more frequently as a protest issue. To cite one example, in January 1999 some 1,000 people from Leibei village in northern Shaanxi Province demonstrated to protest that local elections were dominated by party officials ['One Thousand Protest', 1999]. 26 The actual tax is calculated at 7 percent of household yields but village governments are allowed to levy an additional 1.4 percent to help fund village services, bringing the total tax to 8.4 percent. Planners calculated that since many rural households now also have nonfarm income, the average tax burden would be at or below 5 percent of total household income, thus keeping the new tax in line with the previous 5 percent limit. But for families who derive all of their income from farming – typically the poorest in a village – the tax is discriminatory [Unger, Citation2002: 216–17]. 27 One associated consequence of the rise of gangster capitalism and the possibilities for enrichment that bureaucratic position affords has been a rapid increase in the size of local administrations. In Qipan township, a former commune in Hebei Province, to cite a typical example, the number of officials tripled from 1990 to 2000, reaching a total of 340 [Smith, Citation2000: 16]. 28 A case in point was the sacking in September, 2002 of the municipal building in Yizhou, Guangxi by 5–6,000 sugarcane peasants. They were protesting the local authorities' policies and the sugar factories' failure to pay the arrears owed to them. According to local and external sources, contradictions had been building for some time between peasants who grew sugarcane and the sugar production department, mainly because the sugar production factories failed to pay the peasants on time or purchased sugarcane from them at very low prices. In 2002, for example, the Boqing Food Shareholding Company, a joint-venture sugar extraction factory set up by the largest state-owned enterprise in Yizhou and a British company, only paid the growers 180 yuan per ton, which was far lower than the 200–40 yuan originally promised them. The Yizhou city government also introduced a new policy stipulating that growers could only sell their sugarcane to the city's sugar factories and forbidding them from selling to factories outside the city. Violators were required to pay fines or have their sugarcane saplings confiscated. Clearly benefiting local factories, such as Boqing, the policy set the stage for the peasants' assault on the city government building. It also typifies gangster capitalist activity in the sense that the president of the Boqing company was also the mayor of Yizhou ['Guangxi's Yizhou City', Citation2002: 1]. 29 Experts estimate that at least 70 million peasants have lost their land in the last decade, and they expect that number to rise to above 100 million [Yardley, Citation2004. For a more detailed discussion of the expropriation of peasants' land, see Walker [Citation2005]. 30 Hunan labor activist Zhang Shanguang, to cite but one example, was sentenced to ten years' imprisonment for subversion after giving an interview to a foreign radio station about the plight of China's peasants ['Dissident Speaks', Citation1999: 1; 'Ex-Policeman Jailed', Citation1999: 1]. 31 Western scholars who have analyzed recent peasant politics have mostly ignored this history. Contributing to the 'farmer' construct – an ideologically-charged terminological transformation of contemporary peasants into market-oriented 'farmers' that now predominates in China scholarship – they not only disregard the continuities with the past, but turn the current peasant struggles into something entirely new: an emergent, unprecedented form of civil society or nascent citizenship. Modernization-oriented analyses of this sort thus reinforce the view of peasants (or 'farmers') as people who belong to another time and are just beginning to 'enter the modern world'. 32 The rising was also stirred by poor harvests in the area and building resentment among local residents at the hard line tactics officials used to collect taxes, including demolishing the homes of those who refused to pay taxes and fees that were above the official government rate. Protestors ransacked the Yuandu government building and later beat officials and smashed up their homes before being quelled by 2,000 riot police. One peasant was killed and over 100 were injured ['Chinese Police Maintain', Citation2000: 1–2; see also Smith, Citation2000]. 33 This peasant-based interpretation of democracy (minzhu) clearly corresponds more closely to the vision advanced in the 1978–79 worker-based democracy movement than to that of 'elitist' students in 1989 – many of whom, as ample evidence now shows, excluded peasants from their vision and were horrified at the prospect of a political democracy in which China's rural millions might have the right to vote [Guang, Citation1996: 439–40; Perry, Citation1994: 79–80]. Against such elitist ideas, the worker-based conception of 'socialist democracy' combined notions of popular control over the of and of the production and popular of state through the election of and of leaders at various levels [Guang, Citation1996: As one not only need political but and in the production [Guang, Citation1996: in their protests workers have both the of and and to as a of those In the of 2002 in Heilongjiang Province, for example, through the of and a workers the of and from what were to them the far of the and as Citation2004: of the of China's market-oriented the on See, for example, the by which the of the peasant movement in and its transformation protest to See, for example, the review by and Citation2001: of in and and the about by [Citation2005].