What Does China Think?. Mark Leonard

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      However, their most powerful argument is that a stronger state could help stimulate higher household consumption which currently stands less than 40 per cent of GDP, the lowest of any major economy. The ‘New Left’ claim that China’s model of development is unsustainable because there is a limit to the amount of goods and services that the rest of the world will be able to buy, so China will need to start consuming more of its own products. In the future, China will quite simply need to spend more, and save less. The ‘New Left’ correctly argue that domestic consumption will only rise when Chinese citizens feel less insecure. As long as there is no welfare state to protect Chinese citizens from illness, unemployment or old age they will save their money for the future, rather than spending it as they earn it. The ‘New Left’ claim that only a revitalized central government can provide the social safety net which would give Chinese citizens the confidence to consume. Their words have not fallen on deaf ears. The percentage of central government tax revenue has been gradually increased since 1994, and – rhetorically at least – Hu Jintao and Wen Jiabao have committed themselves to rebuild China’s welfare state.

       Protecting public property

      ‘Property is theft’ has been one of the Left’s favourite expressions ever since Pierre-Joseph Proudhon first coined the phrase in 1840. But while the French anarchist was speaking primarily in conceptual terms, in China it is literally true. The ‘New Left’ talk of a new ‘enclosure movement’ – referring to the way that private landlords grabbed common land in England between the twelfth and nineteenth centuries – that is ripping up China’s social protection system and creating mass inequality. Every week newspapers and websites carry stories of party bigwigs carving up and plundering the nation’s assets under the cover of privatization. Property that was once taken from the rich and given to the peasants is confiscated from farmers and given to developers. Entire villages have been forced off their land to allow property speculators to build new developments; factories have been sold at knock-down rates so that their assets could be stripped and plundered. These cases have seen corrupt officials and crooked businessmen become overnight millionaires while the workers and land-owners whose assets they appropriated received derisory amounts of compensation.

      The three letters that have come to symbolize the most brazen pillaging of collective resources are ‘MBO’, short for management buyout. In 2004, a little-known Hong Kong-based academic called Lang Xianping became a national figure when he used his slot on an obscure local Shanghai TV station to investigate and expose some of these abuses. His show caused such waves that Gu Chujun, the chairman of one of the companies that he exposed, took him to court for defamation with a plucky battle-cry ‘I’m fighting for the honour of the entrepreneurs.’ Before Gu Chujun lost his case and was put in prison, the economist Zhang Weiying came to his defence, complaining about the practice of ‘monsterizing and vilifying entrepreneurs’ and arguing that privatization should continue both for reasons of efficiency and principle. He argued that State Owned Enterprises will never take risks because their managers are appointed by bureaucrats; only capitalist entrepreneurs will create new wealth. Even if there are some irregularities in the privatization process, he claimed, it is a price worth paying because China will only be able to develop when the state has retreated from the economy, and its biggest companies are in private hands. Privatization will benefit all.

      The ‘New Left’ disagree that state-owned companies will necessarily underperform, arguing that they too can recruit professional managers from the market who could be rewarded or punished according to their performance. What worries the ‘New Left’ most are the social costs of privatization. State Owned Enterprises, for better or worse, provided an ‘Iron Rice Bowl’ for their workers: as well as paying workers a salary, they organized education, pensions, housing, healthcare and even sport. Privatization and economic restructuring has not just deprived millions of workers of jobs, it has stripped them of the social protection that made their families’ lives viable as well. The fact that China has gone from full employment to a situation where there are 40–60 million unemployed – as well as tens of millions of migrant workers (mingnong) who live as exiles in their own country with no rights because they have no certificate of residence – has led to work becoming a commodity. The Chinese political elite have been divided for over a decade over the idea of introducing a law to protect private property. Wang Hui talks for many in the ‘New Left’ when he says ‘we have nothing against protecting private property, but shouldn’t we also have a law to protect public property?’

      Cui Zhiyuan has an even more radical idea: a new way of sharing the profits of China’s State Owned Enterprises. China’s 169 biggest companies declared net profits of over 600 billion Yuan ($75 billion) in 2005. But in spite of their enormous profits China’s state companies do not pay dividends to their main shareholder: the state. The government is finally preparing to ask these firms to pay up. However, Cui Zhiyuan wants them to give the dividends to the people rather than the government. His model comes not from China’s socialist past, but from Alaska. Since 1982, the government of this bleak polar state has used some of the income generated by its massive oil reserves to set up a giant trust fund for its citizens, paying them a ‘social dividend’ worth thousands of dollars every year. Cui Zhiyuan argues that profits of State Owned Enterprises should be treated like Alaskan oil, going to the mass of Chinese people rather than a wealthy elite. He claims that this social wage would help to remove Chinese insecurity, allow citizens to take low-paying jobs and increase domestic consumption.

       Green Cat Development

      China’s ‘New Left’ do not just worry about the social impact of China’s breakneck development; they also worry about an environmental nightmare. On my own visits to Beijing, I always know when my plane has entered Chinese airspace: the pollution is so bad that I cannot see the ground. China’s air, water and land are being laid waste by the country’s relentless pursuit of economic growth. As development advances from the eastern coasts, the hinterland is becoming a barren, hellish wasteland – the poorest regions have been transformed into a dumping ground for industrial detritus. Two-thirds of China’s electricity comes from dirty coal, with a new coal-fired plant built every week. China’s factories blurt out toxic fumes and dump chemicals and waste in the rivers and lakes. Chinese agriculture uses fertilizers that are banned in the rest of the world. Already a quarter of China’s land has turned to desert, as a result of deforestation, and this is spreading at a rate of 2,460 km a year. As a result 30 per cent of China has acid rain; 75 per cent of lakes are polluted and rivers are contaminated or pumped dry; and nearly 700 million people drink water contaminated with animal and human waste. There is a shortage of arable land, as millions of peasants find that their fields are confiscated for development or contaminated by chemicals.