China: The Impact of Reform & Development

by Chris Walker — last modified 2008-10-29T10:21:18-04:00
In 1998, the Yangtze River flooded killing more than 3000, demolishing five million homes and inundating 52 million acres of land. The economic losses have been estimated to be greater than $20 billion. There are two reasons for this catastrophe. The first and most obvious – two decades of unconstrained logging combined with destruction of wetlands. Without the basic ecological infrastructure required to manage the annual hydrological cycle, three thousand lives and more than $20 billion was lost overnight. The other reason, elusive in contemporary economic and political discourse, is the awareness of ecological systems as organs within a composite biosphere - a biosphere that possesses both the potential to preserve and expand wealth, as well as the capacity to annihilate it in seconds. Not only is this rather self evident truth marginalized generally, within China, total disregard for such considerations had been institutionalized as we will discover in the final pages of this essay.

By Chris Walker

From Mao to Deng


By the time Deng Xiaoping came to power and began to “open” the Chinese economy, Mao Zedong’s policies has already placed a terrible strain on China’s environment. According to Mao nature was nothing more than another oppressive force to be overthrown and stated that it was to be “conquer[ed] and change[d]” in order for “man…[to] attain freedom from nature.” This conception of the irrelevance of ecological systems was to inform the strategy of the “Great Leap Forward.” During this era of mass mobilization, there were huge land reclamations, which resulted in massive destruction of forests, wetlands, lakes and rivers. In just 24 months, the building of factories was to skyrocket and the number of factories increased from 17,000 in 1957 to 310,000 in 1959. While this fumbling toward “progress” was occurring, infant mortality jumped to 330 per 1000 and anywhere from 35 – 50 million people starved to death. Clearly, there were very real limits to the pace of progress and food production. Nature did not care that a new “revolutionary” people were now making demands on her.

It was also during this era that the mass media emerged as an adjunct of state power, willing to delude and deceive its readers at the behest of the ruling party. One example is that of images of children sitting atop wheat crops, apparently thick enough to hold their weight, which began to circulate. Later it turned out that the photographs were falsified, but the movement toward to catastrophe, wasted lives, lost wealth and social disintegration was already underway. By the time Mao Zedong died in 1976, he had exacted a toll on the environment of staggering proportions. In addition to these degradations, the state terror exercised during the “Cultural Revolution” had traumatized and pacified the Chinese people. Deng Xiaoping had inherited a dysfunctional nation.

It has been argued that after Mao, the population was ready to dispense with rigid communist ideology and pursue a more pragmatic course. While this may be correct, most of the changes Deng was prepared to make were strictly economic, and the broader issues such as authoritarian rule, propaganda, censorship and the use of state violence to coerce the population, were to remain highly functional. Additionally, the assault on the environment was only going to intensify.

Deng’s primary shift was his move from Maoist “self-sufficiency” as a guiding principal, to integration with the global economy – his “open door” policy. Unlike his predecessor, Deng was willing to use international credit, which was to be paid back with coal and petroleum exports, in order to draw foreign capital into China. Another significant reform was the decentralization of China’s trade administration. Originally, the central government controlled a dozen or so foreign trade corporations, which in turn controlled all international trade relations. By the mid 1980’s the ministry of Foreign Economic Relations has approved the creation of 800 trading corporations, each with a designated specialty. By decentralizing trade, and integrating China into the global economy, Deng established the necessary framework for investment and development to occur. Evidence for this is the per capita GDP increase of over 10 fold from 1981 to 2002.

To provide inducement to foreign capital for investment, Deng developed “special economic zones” along China’s southeast coast. Tax provisions and a massive supply of cheap labor made these areas an investors dream. Consequently, foreign investment jumped from $430 million in 1982 to $53 billion in 2002.

Deng also made major changes to domestic manufacturing, which had a rather contradictory nature. State owned corporations that were engaged in large scale manufacturing, could employ over ten thousand workers at just one site. These organizations covered the social needs of workers such as education, health and retirement. Deng choose to dissolve state owned corporations, scrap social benefits and developed a new manufacturing model – the “township and village enterprise.”

The TVE was to become the main engine of the Chinese economy and simultaneously addressed three major issues. Rural to urban migration could be stemmed by bringing jobs to the countryside. The vast untapped rural labor pool could be used to flood the global market with inexpensive consumer goods, bringing even more foreign capital into China. Lastly, the expense of paying social benefits and pensions could be dropped enabling that money to be spent on nation building.

The problem with this seemingly perfect solution to China’s economic growth is manifested on two fronts, the social and the environmental. Dissolving SOE’s has helped create an unemployed migrant workforce, which at present ranges from 70 – 130 million. This ticking time bomb is involved in various low-level conflicts on a daily basis. With no work, no social benefits and no prospects for a better future, this group is a major source of social instability. For those lucky enough to have a job the situation is not much better. Out of the entire urban workforce, nearly half of all workers have no pension or benefits and nationally only six or seven of China’s 31 provinces have solvent pension funds. On the other front, environmentally, China’s growth, and the TVE model specifically, has been a disaster.

The high cost of development


While GDP and investment broke annual records year after year, record levels of environmental degradation were reached as well. The rate of desertification has climbed in recent years to about 3,436 km annually. In terms of deforestation, a major contributor to the Yangtze disaster, some regions have been reduced to less than 4% coverage. Meeting the global demand for furniture had led to half of China’s forest bureaus reporting that trees were being felled at unsustainable rates and 20% have reported that they have already exhausted their resources. To put it quite plainly, not only is production going to slow down as recourses become increasingly scarce and costly, deforestation on this level represents a real financial liability that has already cost China some $20 billion. Now, the idiocy of taking out a loan at 28%, in order to buy stock that grows at a rate of 20% is self-evident - but to understand why China is on this suicidal path, one has to look at China’s political economy.

The TVE model for development and production has one major drawback – there is no governing body capable of enforcing basic environmental controls. Local and provincial authorities have jurisdiction over business development and consistently push off environmental considerations in favor of production. By some estimates, half of China’s pollutants originate in these facilities, and flow freely into the biosphere. In addition to these problems, because of China’s lack of environmental standards, it has become a preferred destination for investment for the most environmentally damaging industries such as petrochemical plants and semiconductor factories – exasperating the problem. There is simply no legal framework in existence that is capable of addressing this issue. There is also little hope of any grassroots action in pressing for reform. The Boston Globe ran a story December 25, 2006, which contained the following information:

In May, when Fu Xiancai, 47, a farmer in Chongqing, spoke to foreign journalists about the inadequate compensation given to people displaced by the dam, he was assaulted by thugs after being called in to visit the local police station, and beaten so badly he is now paralyzed. A police investigation declared that Fu's injuries were caused when he accidentally fell down a hillside.

When the state reserves the right to assault it’s citizens, then lie about it, there is no hope of peaceful legislative reform and quite frankly, with unemployment and starvation very real issues the Chinese citizen must deal with, environmental concerns cannot take priority. Therefore, the onus falls back on China’s leaders, who thus far have shown no interest in addressing these issues. With 8 – 12% of China’s GDP being lost every year to environmental problems, dwindling natural resources, and a collapsing biosphere, China cannot afford to ignore the environment any longer. If China’s economy contracts, it may very well be faced with another revolution. If China does nothing to avert this impending environmental disaster, its economy most certainly will contract, and again, social chaos will ensue.

Humanity and its Host


In his essay, “Language as a Natural Object” Noam Chomsky introduces an interesting dualism of “problems” and “mysteries.” He suggests that in the same way knowledge of prime number lies beyond the domain of what a laboratory rat can understand, some domains are closed to human inquiry, as part of our genetic heritage. He claims that this should not be a cause for distress, but rather should be a conscious part of any rational inquiry. Understanding or anticipating the scope and limits of knowledge at any given time is critical if we are to advance the various sciences and humanities. This is something we should bear in mind when contemplating humanity and its role in the natural order. The question not yet answered is as follows; is the human species a parasite on the natural world, incapable of evolving toward a more egalitarian state? At present evidence exists that would seem to suggest that “higher intelligence” is a sort of misnomer, and that humanity is nothing more than an aggregate of hungry mouths and violent tendencies. At the same time, there is evidence that suggests that humanity has existed, in a culturally advanced state, with proper regard for the biosphere and presently, is moving toward a more just state. What I propose is that this question, while currently unanswerable by empirical means, is not a mystery, but is in fact a question that will be answered in time via the choices we make and the opportunities we miss. For the student of today, the question of how to transform this violent, degraded world into a rationally organized, ecologically sound civilization should be foremost in their mind. In face of great uncertainties, it is critical that we hold fast to a vision of better world, and then take concrete action toward manifesting that world. Particularly in the west, where the state no longer has the privilege of killing its citizens who are bold enough to admonish its suicidal policies. For us to miss this opportunity would be a grievous error.

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Bibliography:

Chang, Gordon. The Coming Collapse of China, New York, NY: Random House, 2001.

Chomsky, Noam. New Horizons in the Study of Language and Mind, New York, NY: Cambridge, 2000.

Huchet, Jean-Francois. The Emergence of Capitalism in China, New York, NY: The New School, 2006.

Lardy, Nicholas. Foreign Trade and Economic Reform in China, New York, NY: Cambridge, 1992.

Economy, Elizabeth. The River Runs Black, Ithaca, NY: Cornell, 2004.

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