China Since the Square

...The government has been unable to get as large a share as it had hoped of the recent growth in the Chinese economy, and one of its responses has been to turn to the printing press, creating serious inflation...

...We know a bit more about what happened in the spring...

...Many workers offended the more ascetically-minded students by drinking...

...Shortages of goods are real, caused by bureaucratic hoarding and supply bottlenecks...

...Instead, it hopes that by placing the blame for problems on unpopular groups at home and on foreigners, it will rally some people, and that a return to price stability and visible arrests of cheaters will at least produce grudging assent...

...The Western press has been less diligent about reporting the economic dimensions of the crackdown...

...In the long run, the government can't really afford to have workplace morale get worse and worse, but it seems pretty clear it doesn't intend to address that problem through democratization...

...Just plain corruption is another cause of inflation...

...If the influence of the cultural opening from the West may have been smaller than the Western press has suggested, the influence of the economic reforms has been enormous...

...The reforms have left the central government broke and unable to do many things it used to do...

...However, the shortcomings of the reform also contributed to the June crisis—and the economic problems may be the most serious ones facing China today...

...The government has recently announced a campaign against corruption in the private sector...

...Aside from knowing that people are punishing the regime by not working, what do we know now that we didn't last June...

...As monetary forces push prices upward, even more serious structural reasons for inflation have appeared: continued shortages of key goods, the need for payoffs to officials by successful enterprises, and a tax structure that encouraged local governments to open their own factories for certain consumer goods—such as wristwatches— while pressuring local retailers (both stateowned and private) not to stock cheaper goods made in Shanghai, Tianjin, or wherever...

...The upshot was a huge increase in corruption and in consequent disgust with the leadership...

...This is a fairly volatile part of the population, and if the austerity program continues, it would not be surprising to see food riots next year, or a year later...

...As SPRING • 1990 243 China Since the Square even relatively honest officials resorted to such measures to get their jobs done, it became all but impossible to police those who were manipulating the gaps between plan and market for personal gain...

...Peasants have been paid for a large portion of this year's harvest with IOUs that have no due date and that are impossible to trade—there are reports that this has led to violence against local officials in some rural areas...

...Even hostile observers agree that during the Beijing Spring crime fell, workplace morale improved, and in general, people gave up on their usual form of resistance—namely, doing as little as they can get away with while not calling attention to themselves...

...In recent months, it has tried to claim that students, except for a few "troublemakers," had little to do with the protests of last spring...

...and this in turn could produce the pressures needed to sweep the hard-liners out of power...

...Moreover, the people in the private sector have no safety net at all...

...For instance, protests seem to have been even more widespread than we thought—the U.S...

...When you get a job with one of these firms, you opt out of all the guaranteed housing, health care, unemployment benefits, ration coupons, and so on reserved for workers in the state sector...

...To some extent, all this may actually suit the regime's purposes...

...And for good reasons...

...High-ranking sympathizers of the Democracy Movement, particularly in the Ministries of Culture and Information, have been purged...

...By spring of 1989 inflation had hit 35 percent in many cities, and salaried workers who didn't have second incomes (honest or otherwise) were being left behind...

...In that case, the government may be able to hold off on any sort of reliberalization for a long time...

...The entering class at Beijing University has been cut by 60 percent, and all incoming freshmen now have to take a year of military training, which will surely be laced with heavy indoctrination...

...An austerity policy of this magnitude has potentially devastating social effects, which will complicate the third thing the government is trying to do: place the blame for both economic dislocation and the spring protests on groups outside the party...

...A large proportion of the students who were still there seem to have been from the provinces...

...These officials were still supposed to mobilize people for all sorts of tasks, from ditch-digging to forming a crowd for visiting dignitaries, but they no longer had the power over people's daily lives that they once did...

...There's no question that the switch from the strict command economy of the late 1960s and early 1970s to the mixed plan-and-market economy of the 1980s has enormously raised the living standards of a great many Chinese, especially in the countryside, and that this has whetted people's appetites for more change in the same direction...

...So where does all this leave us...

...And, of course, intellectual opposition has also been weakened by the loss of prominent people who were arrested or forced to flee...

...The government claims that these measures have brought inflation down to under 10 percent, or less than a third of what it was last spring...

...It's natural for such local officials to rely on whatever powers they still have: for instance, the ability to give a peasant family a large or small quota of fertilizer at the state-set price (much lower than the market price...

...The government seems to be lumping all these people together as "dangerous classes," quite as nineteenth-century European regimes often conflated drifters, criminals, and the working poor...

...First, they created new opportunities— both because there were more goodies around and because, whenever an economy runs partly by plan and partly by market, there are going to be opportunities for profit by those who can move goods from the planned sector, where prices are low and shortages frequent, to the private sector, where the same goods command a much higher price because of the shortages...

...outsiders can't really tell...

...In the aftermath of June, people have returned to various sorts of passive resistance...

...Observers say that the mood at most Chinese workplaces (including many government offices—we should remember that many lower officials sympathized with the democracy movement) is best characterized as "sullen...

...The government has taken harsh steps to prevent a recurrence of coordinated opposition by intellectuals...

...it has blamed as much as possible on unemployed youth, poorly disciplined workers, and people in the private, informal sector of the economy...

...In targeting those outside the state sector and highlighting abuses there—which won't be hard to do—the government is isolating a segment of the people that will be alienated by the austerity drive anyway, and that many others have suspicions about already...

...No doubt, the people in Tiananmen Square wanted a more responsive and less corrupt government, and they favored greater civil liberties...

...If, however, the government can convince the people who are only suffering wage cuts that they have nothing in common with those who are losing more, they may be able to get the former to see the protests as a sort of depoliticized crime — "rioting for fun and profit" as an American conservative once called it...

...The state hopes to reduce its own indebtedness—or at least the problems it poses—by forcing workers and peasants to take some of their payment in forms other than cash...

...This last point is important...

...The severity of the austerity policy could undo that by producing serious social unrest among the already unemployed, the newly unemployed, and the much larger groups who will still have jobs or schools to go to, but who will see their standard of living fall...

...The workers occupied the northeast corner of the square, where most of the heaviest firing took place...

...yet also see the price of cabbage and rice keep rising...

...It appears that before the shooting started, many—though certainly not all—of the Beijing students had already left the square, after deciding that they'd made their point and that violence was likely to occur...

...When people get large amounts of compensation in a form they can't spend, there's going to be a lot less upward pressure on prices...

...Second, the reforms made it very hard even for bureaucrats who wanted to do their jobs honestly...

...After a while, it appears, student and workers in the square began to separate—not over political differences, but over life-style differences...

...The second problem the state hopes to address in this way is inflation...

...Of late, the regime 244 • DISSENT Chhia Since the Square has even felt able to ease up a bit on intellectuals...

...There's the obvious fact that stabilizing prices by cutting the wages of working people is bound to cause real suffering and discontent...

...And if we judge by income, both groups are right...

...The demand that something be done about corruption was one of the most appealing points made by the protesters last spring...

...Consequently, the austerity policy is going to hit hardest at young urban workers, and at the hopes of unemployed urban youth, most of whom have no chance to get jobs in the state SPRING • 1990 • 245 China Since the Square sector...

...In the continuing crackdown since June 4th, workers and unemployed youth have evidently been hit much harder than students and intellectuals (though they have obviously suffered, too...

...One point is that, despite the bravery of many students, and the media focus on the ones from Beijing University, it was other groups that took most of the casualties...

...For the time being, people seem to be swallowing the austerity program—not happily, but without effective organized resistance...

...Many had only just arrived, having come hundreds of miles to join the movement...

...Workers in many urban factories—and, to a lesser extent, offices—are being given their bonuses (usually from 25 to 40 percent of annual pay) in long-term government bonds...

...Consequently, those projects that depend on central government revenue have not fared well—from the army to the national universities, to picking up the deficits of many of the large state-run factories and to the government bureaucracy itself...

...Finally, the reforms massively increased corruption...

...It also seems likely that street crime will increase...

...If some of these people either turn to criminal forms of self-help or to protests that can be portrayed as riots, while the cowed intellectuals stay out of things, the government will have won a propaganda victory...

...The Beijing Goddess of Democracy may have looked like the Statue of Liberty, but the people who erected it also sang the "Internationale...

...Foreign managers in joint ventures have reported that very little work is being done...

...For instance, desperate coal shortages plague much of China, but coal sits on the ground in Shaanxi province because one of the central government projects that didn't get funded during the boom, while revenue was being retained at local levels, was additional railroad-building...

...246 • DISSENT...

...There's also a real possibility of a major crash in China's fledgling private sector, which could be a social catastrophe...

...Most of the small collective and individual businesses that have sprung up in the last decade live on credit, and in a major slowdown they're going to find that the burden of their loans will be heavy, with new loans perhaps impossible...

...Behind the protesters stood thousands of people who made small, silent sacrifices, like the cafeteria workers who did unpaid overtime so that the demonstrators would be able to eat when they got back late from campus (they would come back after dark to avoid the secret police...

...The population seems to feel that it is back to a situation in which the only form of available resistance is "bad habits," which bodes ill for a regime that desperately needs increased production and revenue to meet its large internal and foreign debts...

...People might well see both their wages, and the general price level fall as the boom in construction materials and a few other goods ends...

...government now says that actions took place in over a hundred cities...

...Essentially, these people are being forced to help the state solve its debt crisis by doing their work for future payment, or maybe none at all...

...The combination of relatively low official salaries, which have gotten even lower in real terms since the reforms, with the regime's new stress that "to get rich is glorious" helped demoralize party cadres, who had previously taken pride in the notion that they were leading China into the future, even if they weren't particularly well-rewarded materially...

...Its tax administration is tiny—about six-hundred people—and, as less of the economy runs by central command, Beijing has found itself unable to take advantage of all the growth that occurs...

...But since the government can't figure out what to do about those things, it will try to look good with the claim that it's vigorously attacking corruption without further undermining the morale and public image of the party...

...These businesses have become very important employers in many big cities—they employ at least thirty million urban workers, or around 25 percent of the urban workforce, and in many cities the number of younger workers in these enterprises is over 50 percent...

...It has also said that preventing tax evasion by private firms is a major part of its plan for closing the deficit...

...Although most people in China seem generally to have supported the opening of the economy in the last ten years, many have strongly negative attitudes toward those most involved in the new economic organizations...

...This simple prescription is likely to have very nasty effects...

...It is not at all clear that the most important causes of Chinese inflation are monetary...

...from what little we can tell, the mood in all-Chinese offices and factories is no better...

...The nonstate sector has drawn a lot of people that ordinary Chinese have their doubts about—on the one hand, relatives of officials, using their connections to get coveted licenses, preferential access to materials, and so on...

...they were not about to leave so quickly...

...What the state has chosen to do about this is to try to kill three birds with one stone—and the stone is a classic Western-style austerity program such as the IMF and the banks prescribe for debtor countries...

...To some extent, it's now the government that's following a Western blueprint—that of monetarist economics...

...The government probably knew about these changes in the composition of the crowd, and since the Beijing students were much more likely than either workers or provincial students to have relatives in high places, the government's delay in using violence appears in a new, more cynical light...

...As public policy, this is somewhat dubious: though tax evasion by individual and collective businesses is widespread, as a source of fiscal strain it's not in the same league with the losses run by many large state firms or with the way counties, municipalities, and provinces hide their revenues from the central government...

...We also know more about what happened in Tiananmen itself...

...Thus, while the government squeezes everyone in an austerity program, it is likely to focus attention on the unpopular people in the private sector...

...Many protesters saw their demands as a request that the Chinese Communist party live up to its own promises, and not that China remake itself in the image of the West...

...on the other, people who couldn't get jobs with benefits in the state sector, often because the state sector wasn't hiring much but sometimes because of a record of disciplinary problems in school or run-ins with the law...

...But if you had asked about competitive elections, or a system in which the voices of peasants would count as much as those of intellectuals or bureaucrats, you would have found a lot less agreement...

...The greater inequality that resulted as some people gained much more from the reforms than others has led to resentments among all sorts of groups, from teachers to soldiers, who believe they've been left behind...