Crisis and class struggle in China

THE WORLD’S last major economic crisis, which broke out in Asia in 1997, did not center on either the United States or China. The way out of that crisis, however, depended on an arrangement where the U.S. became the world’s “importer of last resort,” and China’s export trade grew more than sevenfold in the decade from 1999–2008, to $1.4 trillion.1

The simplest way to understand the current crisis is to see it as the breakdown of the arrangement that got the world out of the last one. U.S. imports were financed through a growth of corporate, personal, and government debt—with China providing much of that finance. The bursting of the American debt bubble in 2007 was a trigger for the start of a corresponding crisis in China.

This article begins with a snapshot of the course the crisis has taken so far in China. Next come some notes on the view from the top—how China’s rulers approach the economy in general, and how that approach is shaping their specific responses to the crisis. The last part, and the bulk of the article, is devoted to the view from below, including an assessment of the past two years of struggle, which has grown in pace and scale, taken new forms, and encompassed wider social forces than the peasants’ and workers’ revolts of recent years.

Snapshot of the crisis
When the American subprime mortgage crisis broke out in 2007, China’s problem was inflation, especially in food prices, which rose 12.3 percent. The first real impact of the U.S. crisis was to burst China’s own real estate bubble. China had been undergoing the biggest building boom in world history, both in housing and industrial infrastructure. The boom was premised on the continued growth of exports, however, and when Chinese real estate speculators saw that the U.S. might be unable to sustain its appetite for imports, China’s building boom collapsed.2

In 2008, the Shanghai composite stock index lost 65 percent of its value. The index has rebounded with gains in each month of 2009, but in mid-July, it still had reached just slightly more than half of its October 2007 peak.3

The real-world impact of the real estate collapse began in the first half of 2008 with the industries most connected to the building boom, including construction, steel, brick-making, glass-making, and the like. Before the crisis, the workforce in construction alone was more than 38 million, but by January 2009, 10 million had lost their jobs.4

In the second half of 2008, the crisis hit China’s export industries as Western demand for Chinese goods collapsed. Starting in August of 2008, manufacturing declined every month for six straight months.5 The 4 trillion yuan ($586 billion) stimulus package, introduced in November 2008, has boosted manufacturing in each month since February 2009, but gains are concentrated in industries connected to construction projects, while the export market remains slack. China’s construction gains have thus had the strongest impact on commodity-producing economies, which provide raw materials, but have had little impact on the advanced economies of Europe, Japan, and the U.S., whose major exports to China are in capital goods.6

Industrial layoffs are concentrated among workers whose family background is rural, a group that is registered as “farmers”—who are never counted among the unemployed. For this reason, it’s hard to tell how many industrial workers have really lost their jobs, and estimates have ranged from 20 million to 40 million. Early losses were especially big in the consumer electronics industry, but they spread across the board in areas that China had come to dominate, including toys, appliances, bicycles, and apparel.

One true measure of unemployment is that mass layoffs in the export-producing industries of the coastal cities produced a reverse flow of migration—back to the countryside. About 10 million peasants have been making their way into the cities for wage jobs every year for the past thirty years. In 2008, the flow was at least 20 million in reverse, and in April 2009, officials adjusted the number to 30 million.7

Elite response: Grand strategies for development
To understand the behavior of China’s rulers, it’s worth taking into account their grand strategies for national development. Since the Communist Party (CCP) united the country under Chinese rule in 1949, the rulers’ main objective has been to achieve national development to overcome China’s relative backwardness. There are important differences between today and the revolutionary period, but the drive for national development is a major thread of continuity.

In countries like China that begin with a low technical level, the rulers’ difficulty in catching up with other nation-states is to squeeze more and more work out of workers and peasants in order to accumulate a surplus that can be reinvested at a higher technical level in the next round. The rulers thus need to find a way to keep consumption down among the masses so that they don’t eat up the surplus. That’s the same imperative in the 1980s and 1990s as it was it was back in the first decade of Communist Party rule.8 The major difference is in the methods by which they keep consumption down.

When Mao Zedong was on the ascendancy in the party, especially during the Cultural Revolution of 1966–76, the official policy was to stress political and nonmaterial motivations for hard work. Personal consumption would be postponed as long as the task of national construction, known as socialist construction, had the highest priority.

The other major faction in the party, led by Deng Xiaoping, gained ascendancy in 1978, two years after Mao’s death. Deng’s faction favored material incentives to extract more intensive work out of people, beginning in the late 1970s with the breakup of communal agriculture and the creation of small family farms as micro-entrepreneurial units. At the same time, material incentives were introduced in industry, as managers began to be rewarded according to the profitability of their enterprises. That gave managers at the enterprise level a personal incentive to make their workers more productive.

Starting in the 1980s, social protections for workers and peasants began to be withdrawn, including free education, job security, guaranteed pensions, public health care and other benefits.9 This drove both workers and peasants into a more desperate pursuit of cash to make up for what they were losing. Hundreds of millions entered the wage workforce for the first time. Nominal incomes grew, and so did consumption, but not as quickly as the economy did, which was growing at about 10 percent a year. At $5,370, China’s purchasing power per capita ranks one hundred and twenty-second in the world, behind Egypt and El Salvador. This income figure exaggerates the buying power of most Chinese, because social inequality has widened as the economy has grown. In 2007, the per capita income of the top 20 percent was seventeen times higher than income for the lowest 20 percent. Farmers make an average of $700 a year, and “migrant” workers—who hold most of the new construction and manufacturing jobs—do only somewhat better, averaging $1,170 per year.10

Workers and peasants have not spent all the money they’ve earned, and in fact have one of the world’s highest savings rates at 46 percent of income. They have needed to put money in the bank as insurance against future health care costs, for their children’s education, and as a hedge against the potential loss of their pensions.11

The effect has been the same that the rulers had desired under Mao—which was to get workers and peasants to postpone consumption. The billions that workers and peasants put in the bank represented an expansion of funds that were available as capital for reinvestment.

From the rulers’ viewpoint, this has been a marvelous strategy for expanding the economy during many decades of labor-intensive development. The low consumption of Chinese workers and peasants didn’t just leave more surplus for China’s rulers to reinvest—the low labor costs also attracted foreign capital and made Chinese goods among the cheapest in the world. The repressive nature of the regime has been an integral part of this strategy of development. Repression helps to keep compensation low and forces up the pace of work. Western ideologues may complain that China is a police state, but this is the arrangement that has made Chinese labor so profitable for so many Western capitalists.

This development strategy, however, is not so good if the aim is to make a transition to an economy based on higher levels of technique. That would require higher levels of skill, education, and personal commitment from workers—a new regime where workers are not so much under the lash. Workers would have to be granted more rights, would have to believe that they have a stake in their own productivity, and they would have to be provided with more money to spend. A higher level of consumption would, in theory, provide a home market for Chinese production, thus diminishing the economy’s dependence on low-wage labor for cheap exports.

Such a structural transition would be tricky for the rulers to navigate in the best of times. South Korea made a similar transition in the 1980s, but the rise in workers’ compensation and workers’ rights came out of struggle from below that brought down the military dictatorship.

The difficulty is compounded by the scale of the Chinese economy and its importance to the world economy. China is not simply going through the phases of development that smaller countries have been able to achieve. China’s development since 1978, and especially since the crisis of 1997, corresponds to a whole phase of world capitalism—the neoliberal period. China’s performance in the past ten years has been crucial to the performance of capital worldwide. The regime of producing cheap Chinese exports was the world’s most successful profit engine in the past decade, and exports grew from 20 percent of Chinese GDP in 1997 to 40 percent in 2008.12

Before the crisis, therefore, one might have said this: If China was going to shift the way it relates to the world economy, the world economy itself would have to shift the way it works. But now that the crisis came before China was able that make this transition to a higher-tech, higher-wage economy, the direction of necessity reversed: It’s the crisis of the world economy that’s forcing a transition upon China.

What does that entail?

Boosting domestic demand is a measure that fits with plans for a long-term structural transition, but in the context of crisis, boosting demand has become an immediate, “Keynesian” necessity for recovery—especially now that foreign demand for Chinese products has collapsed. The logic of economic transition to a higher-wage economy is built on a contradiction even in boom years. Higher consumption would have to be financed for some time by low-wage exports. As the world market shrinks in a crisis, there is even greater pressure on bosses to keep wages low enough to continue to be competitive. This sounds like an impossible task for China’s rulers—raise consumption, but keep wages low. The previous phase of development, however, has given them some cards to play during the crisis.

Simply put, they have lots of cash. Unlike the West, China is not going through a crisis of liquidity, where banks refuse to lend money. For one thing, the state controls all the banks, and “there is only a credit crunch when the political leadership wants one,” as one broker put it.13 But more to the point, China accumulated $2 trillion worth of foreign currency reserves during the boom years. What’s more, Chinese corporations have huge savings of their own. While the giants of U.S. capitalism such as GM and Chrysler are coping with massive debts, corporations in China have net savings equal to 22.5 percent of Chinese GDP. The crisis, therefore, represents not a shortage of capital but an excess of capital in relation to the volume of products that world markets can absorb. It’s a crisis of overcapacity.14

Elite response: The shape of the stimulus
The official response to the crisis looks backward to the years of export-led growth and forward to the promotion of a domestic market. The background of the boom years is evident in the government’s 4 trillion yuan ($586 billion) stimulus plan, which was announced last year and is now in full swing. Many provisions of the stimulus are projects that were already on the drawing boards but hadn’t yet been funded—much like Obama’s initial stimulus plan.

The stimulus is thus tilted toward infrastructure projects whose original purpose was mainly to service the growth of production for export. The new airports, roads, rail lines, and canals, which will facilitate transport from the interior to the coast, are really designed to get goods out of China. The projects could boost domestic prosperity in the long run, but as export markets remain sluggish, much of this construction will just create more overcapacity.15

The heavy emphasis on infrastructure does respond to the features of the earliest phase of the crisis—the first half of 2008 when the real estate bubble collapsed. New construction actually does something to alleviate the crisis in employment in the construction industry and the industries that feed into construction. The steel industry, for example, has rebounded since December 2008, but this chronically over-capitalized industry was still operating at 71.3 percent of capacity in the second quarter of 2009.16

Many other details of the stimulus program boil down to an attempt to deal with the dilemma of boosting domestic consumption while keeping labor costs low enough to make China-based businesses competitive on the world market. The state is spending money to help workers and peasants buy things so that businesses can continue to get away with paying the low rates they have been paying—not unlike the way that the U.S. food stamp program allows bosses to pay starvation wages.

For example, officials announced in January an unprecedented 9.7 billion yuan ($1.46 billion) in direct cash payments to the rural poor—a measure to boost the buying power of the population without immediately raising costs to Chinese businesses or foreign investors. In the same weeks, China’s state media were full of reports of plans to double per-capita income of rural residents, and to eliminate rural absolute poverty, by 2020.17

Second is a plan to extend basic state health coverage to more than 90 percent of the population by 2011, with universal coverage by 2020.18 As we noted, the fear of medical expenses has been a major reason Chinese workers and peasants put money into the bank rather than spending it. With the expansion of health care coverage, consumption of domestic goods could rise without additional wage expenses to domestic businesses.

Third is a program of direct government rebates on consumer purchases of major appliances and automobiles. This part of the stimulus pushed May and June retail sales 15 percent ahead of the same months of 2008. Domestic car sales in May 2009 ran 47 percent ahead of last year’s sales—in the same month that overall exports continued to run behind last year’s by 26.4 percent.19

The stimulus plan also contains major direct concessions to business. For example, it reinstates subsidies to export industries that were phased out during the last years of the boom. The phase-out was partly a response to pressure from importing countries such as the U.S., but also partly an attempt by the CCP to encourage capital to move into production for domestic consumption.20 The resubsidization of exports is thus a renewed irritant to trading partners and a step back from building the home market.

Some concessions to business come directly at the expense of workers. In November 2008, for example, the central government instructed localities to freeze any pending raises in the minimum wage. Minimum wages had risen in industrial centers in recent years, in some cases by double digits, because of labor shortages and workers’ struggles. The government has also delayed implementation of protections for workers’ rights that were unveiled in new a labor contract law in January 2008. The stimulus plan also allows factories to cut back wages and hours in violation of previous agreements.21

It’s obvious that the party’s approach to the crisis can only be temporary, because it involves spending the country’s accumulated reserves to simultaneously prop up profitability and the buying power of workers and peasants. The hope is obviously that the economy can make some headway on a structural transition, and the world economy can come out of slump, before the government runs out of money. In this respect, China’s rulers are rolling the dice like every other government is, except that they come to the table with more cash to place their bets. Besides rolling out $586 billion in fiscal stimulus, the government floated the economy in the first half of 2009 with more than $1 trillion in new loans, with the total for the year projected to reach $1.3 trillion—almost one-quarter of the year’s estimated GDP.22

Elite response: Anticipating protest
The state is stepping up its plans to deal with social unrest. CCP leaders have repeatedly expressed concern about the discontent of the unemployed—and they are especially concerned that their plans for job creation will not keep up with the entry of new workers into the job market.23 Every year, China needs about 20 million new jobs to accommodate the workers coming off the farms and the students coming out of universities. Official economists estimate that an 8 percent growth rate is necessary to provide these jobs—and that the stimulus is pushing the economy to reach the target this year (other forecasts are less optimistic). The capital-intensive nature of the stimulus, however, may prevent it from producing jobs at the desired rate, according toFinancial Times economics commentator Martin Wolf:

They have not done a good job of generating jobs recently, because their development path has been quite capital-intensive, much too much dependent on investment, and household disposable income is only 40 percent of GDP, which is why they’re not benefiting fully…. China should forget having a GDP target—instead of having an 8 percent growth GDP target, it should have a real domestic demand target.24

Party leaders seemed to recognize in July that the nominal growth of the economy in the first half of 2009 was not matched by job growth or domestic buying power. A government economist announced that the party’s inner circle, the nine-member politburo standing committee, would meet to plan a shift in stimulus measures for the year’s second half.25

In the context of a dubious job market, officials anticipate continued growth in mass unrest—and expect it to become better organized. “Some informal or ‘invisible’ organizations had launched, organized or mobilized mass incidents related to peasants’ or workers’ living crises,” Shan Guangnai, a researcher with the Chinese Academy of Social Sciences, said in January.26 Organization is “invisible,” of course, because independent political and class organizations are illegal. What officials fear most is the rise of ongoing oppositional organizations that can articulate a political alternative. For this reason, we can expect Chinese officials to continue the pattern set in the boom years—to make concessions to struggle while cracking down on leadership and organization.

It is important to take note of the nature and strength of the official power that oppositional movements face. At one time, the CCP strove to fuse together political and economic power through a unified state plan. The transition away from central state planning, however, did not do away with state ownership. The World Bank estimated in 2001 that the state still controls 80 percent of the economy. It controls all the major businesses, including the banks. Even where private investors have been allowed to buy shares, the state still controls the majority share in most companies. Out of 1,500 Chinese companies that are traded on the Shanghai exchange, three-quarters are still controlled by the state.27 The state’s continuing role in the economy goes a long way to explaining the CCP’s degree of cohesion and its continued grip on power.

State ownership, of course, no longer represents centralized state control under a common plan. The real innovation of the past thirty years has been a devolution of state control to smaller administrative units—down to the level of province, prefect, county, township, and village. The nature of this transition helps explain why the Communist Party at all levels is also filled with major profiteers.

The party thus continues to combine political and economic power—with political power that is still disciplined from above. Every major enterprise, including nominally private ones, is still subject to the oversight of a party committee.28 Upward mobility depends not just on the bottom line but on being a team player in the party—or at least a team player within one of the party’s many factions.29

The party, which now numbers 80 million, continues to reach down from management to recruit the top workers and offer them a path of upward mobility. If China had independent trade unions, these workers would be at the level of shop stewards, the grass-roots level of working-class leadership. In China, however, many potential worker-leaders are recruited to be party members and officials of the All-China Federation of Trade Unions (ACFTU), the state-sponsored union that aims to reconcile workers to the demands of management.30

The party’s deep and extensive roots suggest that it can’t be easily pushed aside by movements from below, despite the widespread hatred of the CCP’s repression, corruption, and conspicuous consumption. Social movements of workers and the oppressed have their work cut out for them in creating an alternative.

Previous shocks and previous struggles
The view from below is that the economic crisis is a social crisis. Chinese workers and peasants have, for the most part, been willing to put up with wrenching social transformations in the past thirty years—as long as the economy keeps growing and promises a better life down the line. Any break, therefore, in the forward momentum of the economy comes as a real shock to the working classes.

The current crisis is really the third break in that momentum. The first break came in the late 1980s as the benefits of economic growth began to be eaten up by inflation. Economic uncertainty contributed to a rise in struggle that culminated in the Tiananmen Square movement in 1989. The movement combined the activity of students with the mobilization of urban workers, and spread widely in China.31 The newer sections of the working class, however, fresh off the farms and working in the sweatshops of the coastal export zones, were mostly bystanders to the 1989 movement—still too beaten-down to rise up, and socially segregated from the old working class.

China’s rulers famously responded with repression, but they also responded with a determination to press forward with market reforms in the hope of replacing people’s thoughts of rebellion with dreams of upward mobility. In economic terms, the plan worked. The economic surge had the most dramatic political effect on students, who gave up agitation for political democracy and focused on their careers. Students, in fact, became mostly a reactionary force, largely loyal to the party in its repression of social discontent.32

In the 1990s, the peasantry emerged as a source of resistance, engaging in revolts against extortionate taxation, against the corruption of local officials, and against the seizure and pollution of their land. The countryside became explosive, as long-simmering disputes could blow up into demonstrations or riots of a thousand or more peasants.33

As peasant movements became widespread, officials started to publish statistics of what they call “mass incidents,” a deliberately vague term that includes strikes, demonstrations, and riots.34 From 1994 to 2004, mass incidents rose sevenfold from 10,000 to 72,000—with most of the growth in the 1990s coming from peasant struggles.

In the late 1990s, the Asian currency crisis produced a second major break in the growth of the Chinese economy. The effects were not devastating in China, because the regime kept the currency protected, but growth did slow down. The official response was to drive forward the expansion of the export sector as countries like the United States responded by expanding credit to finance imports. As we noted above, exports doubled as a percentage of GDP in the decade following 1997.35

The policy drove the expansion of the new working class at the same time that that the CCP stepped up attacks on the “old working class,” which has lived in urban centers since the days of Mao—including the so-called Rust Belt workers concentrated in the northeastern region that used to be known as Manchuria. Chinese policy thus mirrored the practices of neoliberal ruling classes worldwide, which dealt with a relatively high-paid working class by trimming its benefits, breaking up its industry, and simply building a new, lower-paid working class out of new people entering the workforce. The regime had been doing this for some time, but during the broader Asian crisis, it moved decisively against the jobs, pensions, and benefits of the old working class—laying off some 30 million in the late 1990s.36

A resurgent and divided workers’ movement
The result was the beginning of a new workers’ movement at the turn of the century, beginning with long-term urban industrial workers, a group that still numbered at least 120 million in 2000.37 The new movement has been different from the movement of the late 1980s, which was connected to student protests and was ruthlessly repressed in 1989, as new organizations were smashed, and workers’ leaders were killed, imprisoned, or exiled. The rightward drift of students and the middle class following the 1989 crackdown set the stage for a workers’ movement that acts independently and invents its own methods of struggle. The movement has relied on evanescent and underground forms of organization and taps into the discontent that has been growing massively at the grass roots.

The spark came in February 2002 with a series of demonstrations in Liaoyang, in the northeastern province of Liaoning. Workers demonstrated against factory closures and the non-payment of pensions and unemployment benefits. They were able to draw out crowds of 20,000 to 30,000 people in support, including workers from other enterprises. Previous years of smaller struggles had built informal and underground connections between employed and unemployed workers and helped produce the united class eruption of 2002. The Liaoning protests spread to two neighboring provinces, involving some 100,000 laid-off workers.38

Protests like these forced the restoration of some of the workers’ pension benefits, and elicited a general promise from the government that state pensions would be protected. This first series of protests set the pattern of mobilization around very specific local demands that draw a mass response in solidarity—while provoking an official combination of concessions with harsh treatment of leaders. One of the primary leaders of the original Liaoning protests has just been released this spring after seven years of confinement and torture that shattered his health.39

The new section of the proletariat—created since 1978—went into action in the past few years. This group, scattered in far-flung construction sites, suburban industrial zones around coastal cities, and businesses that have sprung up in inland towns and cities, is a bit harder to count than the Mao-era proletariat, but it numbers more than 200 million.40

In order to understand today’s social crisis, it’s important to note that the new working class originates from the peasantry, which numbered some 750 million in 1978. It’s not too much to say that the major engine of Chinese economic growth since then has been the inequality between this rural mass and the older middle and working classes of the cities. In many respects, China was quite an equal society in the 1970s—within regions and within enterprises. Inequality between urban and rural residents, however, was among the highest in the world. Since then, the income gap has grown, reaching a 3.4 to 1 ratio in 2008. This figure does not count the extra benefits of pensions, education, and higher-quality health care that urban residents receive.41

The Chinese regime under Mao managed and maintained this inequality by instituting an apartheid-like political distinction between those who were registered as rural families and urban families. People with a rural family registration, or hukou, had fewer rights to social benefits, and none at all if they moved to a city. As in apartheid South Africa, this made the rural population into a disposable low-wage workforce, which could be brought in to do wage work whenever that was necessary and flushed back into countryside when it wasn’t.42

The secret of China’s seemingly endless supply of low-wage workers during the boom years was that the followers of Deng Xiaoping maintained this apartheid distinction during the reform era. Every year, 10 million peasants would come off the farms desperate for work. In the beginning, they were also gullible because they had never experienced the conditions of wage work or city life. For many years, they were virtually defenseless against superexploitation in the new industries, both because they had no experience defending themselves as workers and because they could easily be replaced by a new crop from the countryside. Most in the export processing zones were women, and thus also faced sexual harassment.43 They also received no help from the old working class, who regarded them the same way the regime did—as low-wage “foreigners” who would come to take people’s jobs.

The social chasm between the old and the new working class still exists, but by the turn of the century the new working class had begun to develop politically through long-term legal and petition campaigns that often centered on the nonpayment of wages and workplace safety.44 Besides growing in sophistication, the new working class acquired new leverage against the bosses as China’s overheated economy began to experience labor shortages. As a result, workers in the massive export processing zones in the coastal cities began to go on strike for the first time in the middle of this decade. They won major concessions, including double-digit raises. The minimum wage in China’s “strike capital,” the southern city of Shenzhen, rose 44 percent from 2005 to 2008.45

Centers of the boom such as Shenzhen and Shanghai have relaxed the rules regardinghukou, allowing some holders of rural hukou to receive social benefits. Such moves, however, represent only a partial relaxation in a few areas, and they don’t abolish the hereditary nature of hukou. Out of Shanghai’s 19 million residents, 6 million are regarded as “temporary,” and the new rules are designed to benefit only high-skilled technicians, not the 4 million “migrant” wage workers—some of whom have lived in the city for twenty years.46

The rural-urban wealth gap, institutionalized through the hukou system, is a stark example of a social arrangement that suits the strategy of low-wage, export-led growth—but stands as an obstacle to building an economy based on higher domestic consumption. The more the government succeeds in boosting rural buying power in future years, the more it will alleviate the desperation that has kept wages low and made China such an attractive place to invest.

Women, national minorities, and students
Besides the class oppression that peasants and workers face, oppression in China takes two other forms that have the potential to provoke social struggle.

One is the oppression of women, whose social status relative to men has been thrown backward during the reform era, especially in the countryside. The replacement of collectives with family farms has restored the old supremacy of husbands and fathers. At the same time, with the withdrawal of pension protection, peasant couples began to depend on support from their offspring in old age. In the restored patriarchal system, girls leave the household when they get married, so it became desirable to produce male offspring who could be counted on to support their parents. This pressure led to an increase in female infanticide and abortion of female fetuses. It also led to more everyday forms of oppression such as domestic violence and the reinstitution of the bride price—through which the family of the groom is supposed to compensate the bride’s family for all the investment it made in raising a girl.

In the cities, there is evidence that sexist discrimination has increased in hiring, promotion, and rates of pay. Women “migrants” to the cities also can rarely find a husband, since hukou status is passed on through mothers, and males with an urbanhukou don’t want their children to be downwardly mobile. The difficulty in finding an urban spouse reduces women’s chances of acquiring an ongoing residency permit.47

There is a contrary movement, however, as more and more women have won some independence from the family by moving into wage work. This has been played out in family after family as peasant girls discover that they prefer life in the city, and refuse to return home or send back money even though they are unmarried.48

The crisis, however, has produced a forced reversal of migration back to the countryside. It’s possible that these women who have acquired higher expectations from life will begin to put up new forms of struggle that are not so private as the family-by-family struggles they’ve waged up until now.
National oppression is another source of struggle, a fact that burst into the world’s consciousness with the revolt of Tibetans in March 2008, and again in July 2009 with a major riot in by ethnic Uighurs in China’s vast western province of Xinjiang.49 National oppression, like women’s oppression, intersects with class oppression in important ways. In their home ground, the fortunes of most Tibetans, Uighurs, and other minorities have fallen behind the prosperity of the country’s ethnic majority, Han Chinese, who have moved in to develop these areas. As in other “development zones” as far away as Ethiopia and the oilfields of Sudan, China has brought in Han Chinese retailers and workers instead of buying from local shops or training local workers. What’s more, when minorities move out of their home areas, their lower initial status—and ongoing discrimination—tends to put them into the working class.50

For this reason, the struggles against national oppression, including struggles for national self-determination, can potentially play a role in building the fighting strength of the working class as a whole. Right now, however, the prevalence of Han chauvinism is dividing the working-class movement and weakening it.

University students, largely quiet since 1989, are a third group that may play a significant role in future struggles. The economic crisis has begun to throw them back into confrontation with the regime. In May of this year, thousands of students in the southern city of Nanjing did battle with police after city administration officers beat up some student street vendors. Student vendors across China, like other students, are struggling to find ways to pay for their education. A month later, students at another Nanjing school rioted when officials told them that their school would not be granting genuine college diplomas as advertised. In China as elsewhere, college diplomas are regarded as a costly ticket to future employment. Parents in eight of China’s biggest cities spend about a third of their incomes on education for their (one) offspring.51

Even students with diplomas can no longer count on finding jobs. In past years, 70 percent of students succeeded in finding work in the first months after graduation, but now only 20 percent succeed. This year, 6.1 million college graduates will be looking for work in a market where more than a million last year failed to find work. In one response to potential unrest, the state announced in June that it would pay for students’ university education in return for two years of military service following graduation.52

Struggle today
Today’s struggles are shaped by lessons learned in the boom years, when grass-roots movements discovered that Chinese officials were willing to grant concessions to mass struggle even as they cracked down on movement leaders and ruthlessly repressed any sign of union or other independent organization. This implicit bargain between rulers and ruled helped to shape a pattern of struggles that were explosive but intermittent and often extremely local. Outbreaks of revolt have relied on a high degree of spontaneous class solidarity, with organization that is minimal, short-term, or secret.

In other words, much of China’s working population is on a hair-trigger. The ruling party’s ideologists are expecting more of the same during the crisis. A commentator inOutlook Weekly magazine, published by Xinhua, China’s official press service, wrote at the beginning of this year:

If in 2009 there is a large number of unemployed rural laborers [i.e., workers holding rural hukou] who cannot find work for half a year or longer, milling around in cities with no income, the problem will be even more serious…Social conflicts have already formed a certain social, mass base so that as soon as there is an appropriate fuse it always swiftly explodes and clashes escalate quickly.53

The mass base for action was evident in the March 2008 revolt of ethnic Tibetans. The demonstrations were not confined to Tibet, and they took on a distinct class character as they spread.

As in earlier demonstrations and uprisings, the initial leadership within Tibet came from Buddhist monks. The demands were moderate—for increased autonomy within the Chinese state—and the monks’ demonstrations in the Tibetan capital of Llasa were strictly controlled, even though they were confrontational.

The movement, however, spilled into the working-class districts of Llasa and became a riot as the poor attacked the symbols of Han Chinese prosperity that have sprung up amidst Tibetan poverty. Some Han Chinese individuals were also targeted, and officials reported nineteen deaths. The Tibetan “government in exile,” headed by the Dalai Lama, claimed that security forces killed 203 Tibetans.54

When the movement spread to three neighboring provinces, it maintained its working-class character and began to demand full self-determination for Tibet. No doubt, many of these Tibetan workers had been influenced by previous experience of class struggle. The Han working class, however, did not unite around the Tibetans, and instead was wrapped up in the anti-Tibetan Han chauvinism that was promoted particularly through the Internet.

The Tibetan revolt broke out in the lead-up to the Beijing Olympics, and Chinese nationalism and Han chauvinism played big roles in helping officials crack down on a number of struggles in those months.55

As the authorities quelled the Tibetan revolt with mass arrests, an unprecedented struggle broke out in late March in Yunnan province, involving a relatively elite section of the working population—airline pilots. Besides being the country’s first recorded airline pilots’ strike, the struggle took an unusual form as pilots went on strike in midair in a coordinated action and headed back to their points of origin. The pilots’ action drew the prompt attention of the highest transportation officials, who rushed to settle grievances across the industry in order to head off wider action. Rapid growth of China’s airlines has produced a 30 percent shortage of pilots, so the principal grievance across the industry is overwork.56

Next came the Sichuan earthquake in May 2008, which could have become a focal point for mass discontent—but didn’t. Some 70,000 thousand Chinese died, including 10,000 students who were buried in the collapse of schools built with substandard materials and techniques. Officials stepped in immediately to arrest the groups of parents who began to organize protests, and the CCP turned the earthquake into an opportunity to rally people for a new task of national construction. The party is still using the disaster to its advantage as it makes Sichuan reconstruction a centerpiece of the stimulus plan.57

The next major Chinese struggle came in late June, when the country’s poorest province, Guizhou, erupted into a riot involving 30,000 to 50,000 residents of Weng?an county. The spark was a police ruling that a teenage girl committed suicide—while family members claimed that she had been raped and murdered by a local official.

The destruction was extensive and far from random. In a review of official reports from Xinhua, a BBC blogger noted:

What is clear is the scale of the attack on the entire apparatus of CCP rule in Guizhou: the party, the police, the courts and the secret police were attacked, their premises comprehensively trashed and set on fire.…

In this incident, the county CCP committee’s building was destroyed by burning; 104 offices of the county government building were destroyed by burning; 47 offices and four facades of the office building of the county public security bureau were destroyed by burning; 14 offices of the criminal investigation building were smashed up; the entirety of the files and data at the domicile administration centre of the county public security was destroyed.58

The scale of this incident was larger than most, but the dynamic was familiar. Some outrageous official act mobilizes a local working population that was ready for action because of previously accumulated grievances. In this case, the grievances were also typical of rural China, including “rude and roughshod solutions” to “disputes over mines, demolition of homes for public projects, the relocation of residents for reservoir construction, and many other issues.”59 Those are the words of a provincial official who was blaming the riot on lower officials at the county level. This is also a typical dynamic—to blame officials at the lowest possible level for abuses that are endemic to the whole country.

It was around this time that the highest officials were instructing their subordinates to go “on a war footing” for the August Olympics to prevent local grievances from exploding to the point where citizens would bring them to the capital. This, too, is a regular pattern, as petitioners move up the chain of officialdom and end up trying to get justice in Beijing. Even in the rare cases when petitioners receive a favorable ruling from higher officials, they are subject to further abuse when they return home—from local officials enraged at being discredited in the eyes of their party superiors.60

The Tibetan revolt had a small echo in August 2008 among ethnic Uighurs in the Western province of Xinjiang, as a taxi driver and a vegetable seller killed sixteen police with knives and homemade bombs. The predominantly Muslim Uighur minority has increasingly turned to Islamist politics as they are obstructed from religious practice—and as Han Chinese language and people have come to dominate the region.61

Authorities seized on the August Olympics as a chance to bolster the state security apparatus with innovations like surveillance cameras, which are still in place. Urban Internet cafés now have live video feeds to local police stations so that police can match a face to any Web activity or e-mail message they disapprove.62 In January, officials also announced that neighborhood surveillance committees that were sent up for the Olympics—which enrolled 1.4 million volunteers—would be maintained indefinitely because of the potential for social unrest during the economic crisis.63

A significant number of struggles have broken out directly because of the crisis itself, especially as the export industries went into free fall around the time of the Olympics. Out of 100 labor struggles documented by China Labour Bulletin (CLB) for 2007–08, twenty-six involved cases of abrupt factory shutdowns (twelve) or bosses’ attempts to keep a factory open at the expense of workers’ rights and wages (fourteen). Workers generally won something from these struggles, but “in nearly all…cases [of factory shutdowns], the local government was left to pick up the wage arrears bill, [and] very often they could only provide around half the wages owed.”64

In recent years, strikes and protests have often ignited struggles in nearby locations or in several outlets of a single parent company—especially in the boom province of Guangdong. In particular, the port of Shenzhen was rocked with a wave of strikes involving dockworkers, crane operators, and container service workers from March to May 2007.65

Last fall, school teachers and taxi drivers both mounted strikes that spread to multiple provinces, the two most extensive waves of strikes within single industries in decades.

By law, teachers are supposed to receive average wages equal to that of other civil servants, but in some places, teachers’ compensation has run at half that rate or lower. The first strikes of primary and middle school teachers broke out in October in central China, in Chongqing municipality, and early victories inspired strikes of teachers at hundreds of schools in Sichuan, Hubei, Hunan, and Shaanxi provinces. Some strikers won victories, but others were cajoled and intimidated into giving up their demands “for the greater good.”66

The taxi strikes also began in Chongqing, China’s largest municipality. Ten thousand drivers, squeezed by declining ridership in the economic slowdown, struck in early November to protest exorbitant license fees that companies now charge them. Unlike the teachers’ strikes, however, which originated in rural Chongqing, the cab drivers’ struggle broke out in the middle of the megacity. The strike had significant impact on the movements of hundreds of thousands by blocking traffic and sending potential riders crowding into buses. The struggle was also unusual because the drivers are registered as permanent urban workers, who haven’t been at the forefront of struggle in recent years. The CCP’s party secretary for Chongqing intervened to force the cab companies to make concessions to the drivers, and word of the victory inspired some fifteen more strikes in other major cities, nearly all of which also produced victories.67

There was, unfortunately, also something all too typical about the taxi strikes. Along with making demands for higher take-home pay, the drivers were protesting the entry of unregistered taxis into the trade—mostly driven by poor “migrants” who carry their second-class “rural” status wherever they go.68 This social distinction between holders of urban and rural hukou is still a sharp one within the working class and a major problem for the movement.

What next?
The pace of struggle has continued to speed up since the economic crisis broke out. Labor disputes officially doubled last year and tripled in coastal areas.69 The more general category of mass incidents also continued to climb. After eleven years of escalating struggle, officials started to keep the tally secret in 2004. The figures, however, continue to leak out. In 2008, officials counted 127,000 mass incidents, and the first quarter results of 2009 reveal a near redoubling of that figure, as officials recorded 58,000 mass incidents—a yearly rate of 232,000.70

As noted above, organization still seems to be minimal and mostly quite local—although there are clearly some ongoing secret networks. Mass actions have depended on a high degree of spontaneous solidarity. There is no perfect analogy to anything in the U.S., but the best thing may be to think of the mass immigrant demonstrations in Chicago and Los Angeles in 2006. In those cases, very small forces of agitation were able to strike the right note in a Latino population that was ready for action. The Chinese working population is like that, but at a much higher level of intensity—and of hatred for official power and institutions. The New York Times noted recently in connection with the July 2009 riot in Urumqi, Xinjiang:

The bloodletting…in which ethnic Uighurs pummeled and stabbed ethnic Han to death, was just the latest episode in a nationwide upswing in large-scale street violence.… In all of the recent cases, not only were officials and security forces unable to contain the violence, but average people clashed with the police en masse—a sign of the profound distrust of local authority throughout much of China.

“In the last several years, the level of violence and speed with which these incidents can turn violent has increased,” said Murray Scot Tanner, an analyst of Chinese security. “It raises a very, very serious question: To what extent are the Chinese people afraid of their police anymore?”71

It is impossible to foretell the direction of struggle, but it is important to note that the most active section of workers in the late years of the boom—the new working class of 150 million connected to the export industries—has so far fought only battles of retreat since the crisis began. The 30 million who have been propelled back into the countryside must be facing a period of disorientation, and those who remain in the cities may suffer setback in clout as urban areas become “buyers’ markets” for labor.

The infusion of urban experience into the rural areas, however, had a major impact on peasant struggles in the 1990s, according to Chinese authors Chen Guidi and Wu Chuntao, who wrote Will the Boat Sink the Water? Back then, mere handfuls of young workers who rejoined their families in the countryside were able to lead struggles of hundreds or thousands of peasants. The current infusion into the countryside is massive in comparison, and it includes many who have recently been involved in China’s hotbeds of struggle.

China’s rulers still have room to make concessions, having accumulated plenty of cash in the boom years. The party’s behavior, and periodic official statements, suggests that it will keep making concessions to “legitimate” struggles while repressing ongoing organization. Out of the hundred workers’ struggles documented by CLB in 2007–08, thirty-seven produced clear victories, sixty cases were unclear, and only three produced clear defeats.72 Results like these reinforce the lesson that struggle pays off.

Revolts of oppressed nationalities, however, still receive the severest repression as officials label them as foreign plots to break up the country. As long as struggles against national oppression are separated by chauvinist ideology from class struggles of Han Chinese—and as long as sharp divisions still exist between workers who are registered as rural or urban—the explosive strength that has developed at China’s grass roots will continue to suffer the weaknesses of local and sectional isolation.

A lot will depend on political developments inside the movement. Discussions about politics and organization are clearly going on from the ground up—including discussions on how to struggle on a broader scale and for broader demands. The obvious things to fight for right now are democratic demands, including freedom of association and equal rights. Freedom of association would include the right to form unions and political organizations. In the fight for equal rights, there seem to be three key areas—women’s equality, the right to national self-determination, and the abolition of second-class citizenship as embodied in the hukou system.

Such demands would need to be voiced inside the movements to bind them together as a force against the officialdom—a task that requires political organization. To make another analogy, the Chinese are at the point of What Is to Be Done? in at least two respects. First, there are mass stirrings of workers and the oppressed, whose activity is sufficient to make much bigger changes to the country if the movement can focus its energies to build its local struggles into more generalized ones. Second, political repression is so severe that any organization designed to focus the movement’s efforts would have to be built with its roots underground.

China is certainly a good place for a rebirth of the ideas of socialism from below. Capitalism has unleashed colossal powers of production that lie under-utilized, in a country whose population is in need of those resources. What better argument against the profit system? China is producing daily evidence of the power of the working class. Thus the need for change is clear, and the potential agents for change are already in motion.

  1. U.S.-China Business Council, July 19, 2009,
  2. On inflation, see “Going it alone: The workers’ movement in China (2007-2008),” China Labor Bulletin, July 9, 2009,, 5. On the building boom and bust, see David Barboza, “China’s building boom becomes a frenzy,” New York Times, October 18, 2005. Richard McGregor, “China’s bank warns of property bubble,” Financial Times, August 16, 2005. “China’s housing market: What goes up,” Economist, October 23, 2008.
  3. “China bulls prefer mainland shares traded in HK, Singapore,” South China Morning Post, January 1, 2009. Lindsay Whipp and Dave Shellock, “Shanghai hits 13-month peak,” Financial Times, July 16, 2009.
  4. John Garnaut, “Downturn likely to hit Chinese workers hardest,” Sydney Morning Herald, January 19, 2009,
  5. Tania Branigan, “Downturn in China leaves 26 million out of work,” Guardian, February 2, 2009.
  6. David Barboza, “Economy in China regains robust pace of growth,” New York Times, July 16, 2009. Joe McDonald, “China’s economy accelerates with help of stimulus,” Associated Press,
  7. Chris Hogg, “Chinese migrant job losses mount,” BBC News, February 2, 2009, Eugene Tang, “China says 30 million migrant workers have lost jobs,” April 22, 2009,
  8. On the CCP’s drive to expand production and restrict consumption in the 1950s, see Nigel Harris, The Mandate of Heaven: Marx and Mao in Modern China (Quartet Books, 1978), 41–46.
  9. Liu Yufan, “Will China shake the world?” (two-part article) International Viewpoint, March 2002, 25 and April 2002, 30–31.
  10. “Going it alone,” 6. Geoff Dyer, “China becomes third largest economy,” Financial Times, January 14, 2009. Anita Chang, ?“Jobless migrants flood back to China’s villages,” Associated Press, ?January 19, 2009,
  11. Willy Lam, “Beijing’s stimulus plan: Preemptive crisis management,” November 24, 2008, China Brief, vol. 8, issue 22,
  12. “Rebalancing the Chinese economy,” Financial Times, January 15, 2009.
  13. “Strong as an ox?” Economist, January 22, 2009.
  14. Zhou Xiaochuan, “On savings ratio,” speech posted March 24, 2009, on People’s Bank of China Web site, On Chinese manufacturing overcapacity, see China Quarterly Update, World Bank, June 2009,
  15. Joe McDonald, “China’s economy accelerates with help of stimulus.”
  16. “China Q2 steel capacity utilization only 73.1pct,”
  17. “A great migration into the unknown,” The Economist, January 29, 2009. J.R. Wu, “China registers deficit after burst of spending,” Wall Street Journal, February 1, 2009.
  18. Qingyue Meng, “New directions in China’s health sector reform,” March 2009, China Brief, vol. 9, issue 5, Hugo Restall, “Can Asia consume a way out of crisis?” Far Eastern Economic Review, November 2008, 10.
  19. “Asian stimuli,” Financial Times, June 12, 2009. Keith Bradsher, “China’s economic growth takes a domestic turn,” New York Times, June 12, 2009.
  20. Jonathan Adams, “China favors jobs at home over free trade,” Christian Science Monitor, January 2, 2009.
  21. “Going it alone,” 6. James Pomfret, “Chinese workers find rights imperiled in crisis,” New York Times, February 9, 2009. “ACFTU in a time of crisis: Back to the old ways?”, May 13, 2009.
  22. Richard McGregor, “China growth accelerates to 7.9 percent,” Financial Times, July 16, 2009.
  23. Vincent Kolo, “Chinese regime braced for ‘mass conflicts’ in 2009,”, January 8, 2009.
  24. “Fixing global finance: An interview with Martin Wolf,” YaleGlobal Online, March 5, 2009,
  25. Cary Huang, “Beijing plans policy change on economy,” South China Morning Post, July 13, 2009.
  26. Stephen Chan, “China’s protesters becoming ‘better organized,’ say experts,”, January 19, 2009.
  27. Derek Scissors, “Deng undone: The costs of halting market reform in China,” Foreign Affairs, May/June 2009.
  28. Derek Scissors, “Deng undone.”
  29. For a recent attempt to decipher factional behavior in the CCP, sees Victor C. Shih, Factions and Finance in China: Elite Conflict and Inflation (Cambridge: Cambridge University Press, 2009).
  30. See “Protecting workers’ rights or serving the party: The way forward for China’s trade unions,” China Labour Bulletin, available at
  31. On the Beijing movement, see Dennis Kosuth, “Storming the gates of heavenly peace,” International Socialist Review 66, July–August 2009. On the spread of the movement, see Charlie Hore, The Road to Tiananmen Square (London: Bookmarks, 1991), 112–17, 128–29, 134–35.
  32. Liu Yufan, “Will China shake the world?” International Viewpoint, March 2002, 21.
  33. The best source in English on the peasant revolt of the 1990s is Chen Guidi and Wu Chuntao, Will the Boat Sink the Water?: The Life of China’s Peasants (New York: PublicAffairs, 2007).
  34. Roland Soong takes a critical look at China’s accounting of mass unrest in “China: Statistics of mass incidents,” November 26, 2006,
  35. “Rebalancing the Chinese economy.”
  36. “Going it alone,” 20.
  37. He Qinglian, “A listing social structure,” Chaohua Wang, ed., One China, Many Paths (New York: Verso, 2005), 173.
  38. Vincent Kolo, “Yao Fuxin, leader of 2002 workers’ protests, is ?released from prison,” March 17, 2009,
  39. Ibid.
  40. “Going it alone,” 14.
  41. Feng Wang, Boundaries and Categories: Rising Inequality in Post-Socialist Urban China (Stanford: Stanford University Press, 2007), 30–31. John Garnaut, “Downturn likely to hit Chinese workers hardest.”
  42. David Whitehouse, “Chinese workers and peasants in three periods of accumulation,” speech at the Colloquium on the Economy, Society and Nature, University of Kwazulu-Natal, March 2, 2006. Available at,75,10,2435.
  43. The harrowing conditions in the export processing zones are ably documented in Anita Chan, China’s Workers Under Assault: The Exploitation of Labor in a Globalizing Economy (Armonk, New York: East Gate Books, 2001).
  44. “Going it alone,” 30.
  45. David Whitehouse, “Chinese workers and peasants in three periods of accumulation.” “Going it alone,” 6.
  46. Cao Li, “Shanghai details new hukou policy,” China Daily, February 24, 2009,
  47. Liu Yufan, “Will China shake the world?” April 2002, 33.
  48. Many of these issues are well depicted in the 2007 PBS documentary, China from the Inside: Women of the Country (transcript available at and the 2008 Frontline episode, “Young and restless in China (video at
  49. See David Whitehouse, “The struggle over the future of Tibet,” International Socialist Review, May–June 2008, and David Whitehouse, “The changing shape of struggle in China,” Socialist Worker, July 9,
  50. Kathrin Hille, “Hunt for leaders of Uighur race riot fuels divide,” Financial Times, July 25, 2009.
  51. “Student demonstrators clash with police in Nanjing,” South China Morning Post, May 20, 2009. Zhou Meihua, “Several thousand Nanjing students protest diploma bait and switch,” Epoch Times, Michael Tighe, “China jobs slump makes graduates swap dreams for civil service,” May 15, 2009,
  52. Michael Tighe, “China jobs slump.” Dong Hui, “Military will take college graduates,” Shanghai Daily, June 12, 2009.
  53. Vincent Kolo, “Chinese regime braced for ‘mass conflicts’ in 2009.”
  54. Edward Wong, “Chinese question police absence in ethnic riots,” New York Times, July 18, 2009. David Whitehouse, “War footing for the Olympics,” Socialist Worker, July 8, 2008,
  55. David Whitehouse, “The struggle over the future of Tibet.” See also David Whitehouse, “Revolt and repression as the Games begin,” Socialist Worker, August 8, 2008,
  56. Zhang Hong, “Turbulent times,” China International Business, May 2008,
  57. David Whitehouse, “War footing for the Olympics.” Tan Yingzi, “Still waiting for a decent roof,”China Daily, June 25, 2009,
  58. Paul Mason, “Guizhou riot was comprehensive attack on CCP,”
  59. Final autopsy shows girl in SW China protest drowned,” Xinhua, July 10, 2008,
  60. David Whitehouse, “War footing for the Olympics.” See also Chen Guidi and Wu Chuntao, Will the Boat Sink the Water?, 3–26, 81–82, 107, 119–20.
  61. David Whitehouse, “Revolt and repression.”
  62. Keith Bradsher, “Beijing adds curbs on access to Internet,” New York Times, June 26, 2009.
  63. Josephine Ma, “Security panel chief warns of more unrest and social tension,” South China Morning Post, January 13, 2009. David Whitehouse, “Revolt and repression.”
  64. “Going it alone,” 16–17.
  65. Ibid., 19–20.
  66. Ibid., 27–28.
  67. Ibid., 14, 28–29.
  68. “China: Hunan taxi strike continues despite arrests,”, April 12, 2009.
  69. “ACFTU in a time of crisis: Back to the old ways?”, May 13, 2009.
  70. China Labour Bulletin, “Protecting workers’ rights or serving the party,” 6. “China: 58,000 “mass incidents in the first three months of 2009,”, May 5, 2009.
  71. Edward Wong, “Chinese question police absence in ethnic riots,” New York Times, July 17, 2009.
  72. “Going it alone,” 31.


Issue #72

July 2010

¡Todos Somos Arizona!

Issue contents

Top story




Critical Thinking


  • Getting slaves to market

    Greg Love reviews The Slave Ship: A Human History by Marcus Rediker and Saltwater Slavery: A Middle Passage from Africa to American Diaspora by Stephanie Smallwood
  • Lenin’s Marxism

    Paul D'Amato reviews Lenin’s Political Thought: Theory and Practice in the Democratic and Socialist Movement by Neil Harding