Reports
of "China fever" among Taiwanese businessmen and the abundant
negative results thereof for Taiwan's economy need no introduction.
It is abundantly clear that cheap labor, the availability of relatively
inexpensive land, a common language and the prospect of profiting
from 1.3 billion Chinese consumers have enticed Taiwanese manufacturers
to pour more than US$70 billion into China in recent years. More Taiwanese
manufacturers are in the process of making the move.
And, why not? Taiwan,
as well as South Korea and Singapore, has been adversely affected
by the US economic slow-down, particularly its tech sector companies.
Further China is the only Asian economy to emerge relatively unscathed
from both the recent downturn and the financial crisis three years
ago.
However, in contrast to
the boundless optimism of Asian businessmen rushing to set up in China,
there have been numerous Western reports about increasing signs of
unrest in China.
A 308-page book entitled
China Investigation Report 2000-2001: Studies of Contraditions Among
the People Under New Conditions has more than confirmed the objectiveness
and accuracy of the Western reports. The book is produced by a top
Chinese Communist Party research group and was published by an officially
sanctioned Communist Party publishing company. According to a June
3 New York Times article entitled China's Inner Circle Reveals Big
Unrest: "The unusual report...describes mounting public anger
over inequality, corruption and official aloofness, and it paints
a picture of seething unrest almost as bleak as any drawn by dissidents
abroad. It describes a growing pattern of large protests, sometimes
involving tens of thousands of people." The article goes on to
say that the people participating in protests "are expanding
from farmers and retired workers to include workers still on the job,
individual business owners, decommissioned soldiers, and even officials,
teachers and students." It hasbeen predicted that when China
enters the WTO, these conflicts will only increase.
Why
didn't investers taken social stability into consideration before
moving their capital and technology into China? Should they not re-evaluate
the changing situation, particularly now that an official government
report has alerted them of the danger?
Let's focus on what is
arguably the most serious problem that is facing Jiang Zemin (江澤民)
and his cohorts: income inequality. The economic reforms initiated
by Deng Xiaoping (鄧小平) in 1979 have created a China that is becoming
more unequal. Coastal China is more developed than interior China.
City folks are better off than country bumpkins. Add to this equation
the fact that a significant percentage of urban residents have no
jobs and rising discontent among the great majority of Chinese who
have not benefitted from the government's "Let some people get
rich first" policy becomes irrefutable fact. More so than others,
the leaders of Communist China understand well the problem of alienation.
During
Mao's rule (1949 to 1976), the people were indoctrinated to embrace
egalitarianism. Peasants in particular worshipped Mao as if he were
god. Peasants were and, to a large extent, still are Maoists. They
endured poverty when all Chinese endured it. Now, however, with crime
on the rise and corruption widespread among officials, one cannot
blame China's impoverished peasants for building resentment towards
their government They are nostalgic for the Mao years of spartan yet
egalitarian life.
Increasing numbers of
peasants have protested the rising tax burden imposed on them. Those
who do not protest migrate to the cities on the coast to look for
jobs. Unfortunately, not many of these frequently transient people
find work. Reportedly, 100 million of such people have joind the so-called
mangliu (blind flow) moving hopelessly from city to city.
In the cities away from
the coast, workers have been let go because the state enterprises
which employed them are being forced to close because of inefficiency,
bad debts and the simple fact that markets do not exist for their
products. Keep in mind these urban residents used to enjoy free housing,
education and health care. There was virtually no unemployment during
the Mao years. Now there is much unemployment and it is on the rise.
There is an excellent
report entitled "To each according to his ability," in the
June 2-8 issue of The Economist. This report cites an article in the
official Renmin Ribao (People's Daily) in which Premier Zhu Rongji
(朱鎔基) was asked by a reporter if he knew "The general public
had voiced fairly stong complaints about income distribution."
Zhu admitted that in 1999 China's `Gini' coeffient, which measures
income inequality, was 0.39 and "close to the internationally
recognised danger level." Interestingly, the this official news
agency said the figure stood at 0.458 -- even higher than recognized
by Zhu. More importantly, some Chinese economists believe that the
"danger level" has already been passed and that official
statistics considerably understate the income gap. Even using Zhu's
figure, The Economist's reporter argues that China's income distribution
is slightly more uneven than India's. If we are to believe He Qinglian,
a Chinese economist, it could be close to 0.6, making China's income
distribution is among the world's most skewed.
In short, Beijing is threatened
by the prospect of a vast number of frustrated and alienated Chinese
who have been promised that they too will become richer, though when
that will happen the government isn't inclined to say.
It has been two decades
since economic reform began and income inequality is increasingly
a source of social instability. China's government is well aware of
this problem, yet unable to do anything beyond inviting foreign investors
to pour their money into the country's volatile and corrupt interior
provinces.
As the US market becomes
less able to absorb imported goods from Asia due to a continuing economic
slow down, the prospect of reaching 1.3 billion Chinese consumers
becomes all the more attractive. The sheer size of China's population
is, however, a lot more beautiful as a statistic than as a seething,
shifting reality.
The
bulk of China's people are still deeply and hopelessly impoverished.
It is highly unlikely that China's people, however statistically beautiful
in terms of sheer numbers, will be profiting anyone's bottom line
any time soon. It is, however, likely that China's social unrest will
only continue grow.
It would be wise for Taiwanese
companies to seriously consider China's increasing social instability
before moving their operations to China. They could end up losing
more than just their shirts in a great Chinese upheaval.
Ching-chih Chen is a professor
of history at Southern Illinois University
