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The Basics of China’s P2P Lending Bust

Xiao Man, August 9, 2018

 

p2p bust

https://shuju.wdzj.com/problem-1.html

 

China’s online P2P lending platforms are currently being rocked by one crisis after another, with media and the public calling a crash, collapse, and high storm in the sector. A large number of investors who have lost their principal entirely have recently flooded into Beijing to petition for redress. To shield the financial institutions from the public rush, Beijing police set up barricades on August 6, grabbing anyone they thought suspicious and loading them into rows of passenger coaches they had lined up on the Second Ring Road.

Video and photographs show buses, full of petitioners, along the shoulder of Beijing’s Second Ring Road; police were also stationed nearby in large numbers. China’s Banking Regulatory Commission, the Bank of Beijing, Bank of China, and other major financial institutions were the focus of the police defense measures. Some reports also say that a number of important financial agencies in Beijing received instruction to establish patrols inside and outside their buildings and strictly prevent outsiders from entering. Employees of the banks were instructed not to stop and make a spectacle of the intrusion, and that they had to wear their employee badges at all times.

In June, China’s supervisory and regulatory agencies embarked on a clean-up of online financial platforms, resulting in the liquidation of over 100 P2P lending platforms, business closures, flight of executives, and the cessation of redemptions for investors. A full-blown domino effect had taken hold by the end of July; within the first week of August, 42 P2P companies went bankrupt, sparking the mass protests by investors attempting to recoup their capital.

As the Financial Times explains, after 40 years of reform and opening to the world, the Chinese have capital they wish to invest, but are dissatisfied with simply leaving it in the bank. Nor are they happy with the “wealth management products” offered by banks. But due to China’s political system, the financial system is monopolized, and the development of the internet and in particular smartphones gave investors and lenders the ability to rapidly find platforms matching them with borrowers for their capital. This allowed some degree of financial liberalization and ‘inclusive finance’ (普惠金融).

China’s peculiar national circumstances have resulted in the rapid development of internet commerce, with both good and bad companies in the mix — and to a degree, growth in the sector has been distorted. The result has been that investors face risks beyond those expected in a normal market economy — they must also bear the risks of the gaps and loopholes in regulation caused by the political system. There are both good and bad P2P lending platforms in China. Many of them, in order to gather capital, have deceived investors by trumpeting their connections to officialdom. Some of them do legitimate business, while others are simply Ponzi schemes. Further, the deterioration of economic conditions in China has led some projects that initially appeared viable to become insolvent and unable to return investor capital. Finally, the government policy of deleveraging has resulted in a lack of liquidity in the market, making it impossible for some of these platforms to source new funding to pay out creditors.

Because many P2P platforms were endorsed by local governments — or claimed they were backed by state enterprises and took out advertisements on CCTV and other state media — they won the trust of investors. By 2016, 160 million Chinese had taken part in P2P investment; by 2018 the P2P market had grown to a value of over 7 trillion yuan [Translator’s note: according to DBS Group Research, the figure was 1.2 trillion yuan ($175 billion) by 2017]. In the first half of this year, the legally responsible individuals at over 700 lending platforms absconded, leaving investors unable to get back their capital. The sums involved extend into the hundreds of billions of yuan. In particular beginning from early June, 150 P2P platforms have defaulted on payments to creditors.

On June 14, the chairman of the China Banking Regulatory Commission, Guo Shuqing (郭树清) said the following at the Lujiazui Forum: “When anyone offers you a yield above 6%, you need to ask questions; when it’s above 8%, it’s very dangerous; if it’s above 10% then you need to be ready to lose all your capital.” Yet the warning came too late. The platforms that quickly unraveled included both state-backed and private enterprises; some P2P companies stole their customers’ funds, while others had liquidity problems causing defaults. The majority of investors with losses regarded themselves as ‘financial refugees’ and hoped the government would take a stance and resolve the problem, taking responsibility for the absence of supervision. They sought to converge on the key financial institutions in Beijing, and hold demonstrations and assemblies to put pressure on the authorities to make them whole.

Apart from retail investors extending credit, P2P lending platforms were a major source of funding and liquidity for small-sized enterprises that were unable to get loans from banks. When the platforms buckled, these companies also lost their source of funding, which further accelerated the collapse of other P2P platforms.

Scholars in China have pointed out that China to this day has still failed to develop a mature system for extending credit to businesses and individuals, and despite this the government began allowing the development of P2P lending platforms — effectively a dereliction of duty as regulators. Though the Beijing police managed to strangle the first wave of protests in its crib, the essence of the problem hasn’t been resolved. From now on, P2P lending platforms will become a new problem affecting China’s social stability.

 

 

This article was published in Radio France Internationale on August 7, 2018, translated by China Change. 

 

 

 

The Significance of Crane Operators Across China Going on Strike

Wang Jiangsong, May 7, 2018

 

Crane operators on strike

 

On April 25, an open letter from a WeChat group named “Changsha tower crane operator federation” (长沙塔吊联盟) was circulated. It said:

To all hardworking front-line tower crane operators, conductors, and elevator operators, greetings! As construction, crane, and mechanical equipment operators and engineers, in the most dangerous line of work on the construction site, our salary and compensation is severely out of step with the risks we take and the utter indispensability of our work. In the construction industry, the hours we work far exceed those stipulated in the Labor Law, and we have no social security. Yet despite being in the most unsafe work and working the longest hours, our pay is miniscule. In order to trigger a wave of simultaneous strikes among crane operators around the country, in order to protect our basic labor rights and dignity, and gain an equal salary, the Changsha tower crane operator federation has decided to unite, stand-up, and declare that we have the right to basic dignity in our labor and the right to engage in collective bargaining. Thus, we call for a united strike on the eve of International Labor Day of May 1, in Changsha’s May First Square (五一广场), so that we may make our voice known. We welcome and will be grateful for support from all walks of life.

Location: Changsha May First Square

Content: Organize a more robust crane operator federation, make better videos of the demonstration scene than that of crane operators on strike in other provinces, and reiterate our demand for construction labor rights.

Given the kind of activity and the particular nature of the profession involved, we hope that all fellow workers will proactively participate and make our voice known to the whole of society.

Changsha Crane Operator Federation
April 25, 2018

The letter caused an uproar in the WeChat group, and when shared around came along with expressions of concern for the safety of the crane operators. As expected, the following afternoon, one of the workers who posted the message said: “Terrifying. Because I forwarded a post about a worker strike on May 1 yesterday, the Changsha Ministry of State Security collected all possible information about me within a day, including my address, telephone number, work unit and more. Two hours ago they came to my workplace and demanded that I come to the police station and explain myself.” The worker promised to the MSS agents that he would not participate in any of the activities and was then allowed to leave, though he’s now worried that his employer is going to fire him because of it.

Moreover, the event was not limited only to crane tower operators in Changsha, but one that had been called for by various WeChat groups of tower crane operators across the country, making it a national event. On April 26, the spokesman for crane operators in Hainan published a video on Weibo calling on all operators in the province to join the national strike on the morning of May 1, with the demand that their regular salary and overtime wages be increased. “If we don’t strike, who’s going to increase our income?” he asked, adding: “A strike won’t be nationwide without workers in Hainan. Hainan crane operators too are full of passion, so let it burn!” On the same day, crane tower workers in Zigong, Sichuan Province, held a demonstration, their banners demanding wage hikes, or else they’d also join the May 1 strike.

The following day, workers in the following eight cities in eight provinces also held banners and circulated photographs of their protests online: Nanchang in Jiangxi, Tianshui in Gansu, Zhumadian in Henan, Xiantao in Hubei, Qingzhen in Guizhou, Huaian in Jiangsu, Hengyang in Hunan, Xiamen in Fujian.

Over the next three days, workers in at least 13 cities (Wuhan, Shijiazhuang, Yinchuan, Sanmenxia, Luoyang, Lankao, Yuncheng, Zhuzhou, Yueyang, Pingjiang, Dazhou, Zhongshan, Maoming) and elsewhere also held assemblies and shared photos and videos of their protests online. As of April 30, according to a preliminary count, the provinces in which crane operators staged demonstrators, held banners, called slogans with their demands, and shared photos or footage online, include: Hunan, Hubei, Henan, Hebei, Jiangsu, Jiangxi, Hainan, Fujian, Gansu, Qinghai, Ningxia, Sichuan, Guizhou, Guangdong, Guangxi, Shanxi, Shandong, Shaanxi — 19 provinces, with protests in between 27 and 30 cities. Participants ranged from dozens to hundreds in each event. This is the first instance of such a large-scale, nationwide, collective action by industrial workers in China for over decades, and may in fact be the first instance of its kind ever.

When May 1 came around, however, China’s crane operators did not formally go on strike. There are three potential explanations for this.

The first is that some places already agreed to the demands to increase wages and overtime pay, while other cities saw those examples and emulated them; the second is that some local governments said they would strictly prohibit any such strike, and the workers were sufficiently cowed as to call off the plan; the third is that the crane operators didn’t want to get mixed up with the ‘May First National Civil Resonance’ (五一全民共振) called for by some overseas activists, which has explicit political objectives. The latter, under the strict control of the authorities, didn’t go anywhere.

Despite that, the genesis of this large scale ‘mass incident’ of crane operators deserves our attention and analysis.

  1. This is an inevitable development in the evolution of China’s market economy and labor-capital relations

During the first wave of labor mobilization in China from 2010 to 2015, almost all collective worker actions took place at specific companies: for example, with strikes at Carrefour and Walmart. In these cases, though the strikes spanned multiple stores, the number of participants involved was not large, and still the action was limited to that particular chain of stores.

China’s labor movement is bound to follow the trajectory of the broader economy and labor-capital relations, and thus expand from actions in particular companies to actions spanning multiple companies, regions, and even industries. This instance of a simultaneous mobilization of crane tower operators in dozens of cities across the country has every qualification to be considered the beginning of a historical inflection point in labor in China.

Strictly speaking, collective rights defense taking place at one enterprise can only be called a ‘collective labor action,’ and not really a ‘labor movement.’ Only when many workers establish horizontal ties among one another, achieving a cross-enterprise and cross-region network, can it be called a labor movement proper. One of the most effective and powerful forms of organization, allowing a group of geographically distributed workers to unite their forces and coordinate actions in a single organizational structure, is the industry-wide labor federation. This is also why this form is a core component of labor movements in market economies, and the primary vehicle for collective bargaining between labor and capital. The reason for this is that workers in the same occupation, business, or industry, are in the same position vis-a-vis capital, and have identical interests that they demand from the same counterparty, thus their solidarity and unity has the lowest cost. As soon as they unite, they immediately have the power of scale; once they’re successful, they have ongoing efficiencies of scale to maximally resolve the structural problem [of disparate power between capital and individual workers], and the collective bargaining agreements they reach with industry have the power of law in governing labor-capital relations. All this is entirely consistent with the aspirations and demands of freedom, equality, and justice in exchange and contracts in a market economy, and at the same time is the fundamental meaning of a market economic system governed by the law. The responsibility of the state (defined as legislature, administration, and judiciary) is located in the preservation, not the destruction, of the freedom, equality, and justice of this negotiating mechanism between labor and capital.

  1. The state should rationally treat self-initiated, self-directed, and self-organized collective actions and acknowledge and protect the three rights of labor

The outside world only learned about this collective action by crane operators after the fact, and knew nothing of their internal discussions, contact with one another, organization, and planning before the fact. There is also no information or evidence indicating that outside players (for instance labor NGOs) got involved or played any role in assisting, counselling, guiding, or providing any other form of help. Even less has there been any shadow of ‘hostile foreign forces.’ Thus, we have every reason to understand this sequence of events as a self-initiated, self-directed, and self-organized collective action on the part of crane operators themselves.

If this conclusion is valid, then the mistaken judgement of the relevant organs in the government must be corrected: they believe that collective action by workers are necessarily directed, organized, manipulated, and planned behind-the-scenes by hostile foreign forces or domestic NGOs, and that they’re competing with the Party, government, and official unions for the working class. This is likely one of the primary reasons behind the mass arrests and prison sentences of labor organizers in December 2015, particularly the arrests on December 3. Following the December 3 incident however, instances of collective rights defense by workers did not contract in scale, but after a short lull in fact came back in full force, and as in the case of the crane operator demonstration attained a high water mark. All this abundantly demonstrates that the level of [labor] consciousness and organizational capacity of workers in China has reached a new level, at least in some sectors and regions, and they’re capable of their own collective action without the involvement of outsiders.

In the past, the standard operating procedure for the relevant organs when faced with labor protests — they themselves having failed to do their job and duty of defending the legal rights of workers, then lost the trust of workers — was to find a scapegoat: blame it on the incitement of hostile foreign forces or domestic NGO activists. This was how they passed it off to their own superiors. The shame is that this sort of buck-passing is actually able to deceive the higher-ups, though workers aren’t fooled, and the actual problems facing workers are unchanged. Thus the resentment and rage builds up daily, and the conflicts between labor and capital, and even between labor and the government, become more and more intense. Put it bluntly, the scapegoating that goes on is simply digging the government into a pit.

The experience and norms of market economies tells us that the state should rationally and forthrightly address issues raised by self-initiated, self-directed, and self-organized collective action, and acknowledge and protect the rights of workers to form organizations (freedom of assembly), to engage in collective bargaining (the right to collective dispute resolution), and to strike (the right to industrial action).

  1. The demonstration by crane operators establishes a model for broader labor and social movements

Crane operators, as the prime movers behind this collective labor action, appear to have come to a clear realization of themselves as a specially-positioned technical worker in the production chain — they have a ‘structural power’ and to a degree are irreplaceable. The crane operators also effectively reached out to and integrated in their efforts crane conductors and elevator operators, upon which they recognized that the interests of the entire construction site and all the workers and jobs on it are related, to a large extent, and in common with their own. From this they could foresee that as long as there is no undefendable attack by an outside force, the natural course of affairs would have it that a construction industry union is formed. This is the only fundamental means of getting at the root of the chaos and problems in the construction industry.

From a broader perspective, it is beneficial not only to workers, but the entire construction industry, society, and the nation. The next direction for the labor movement in China is for workers in each industry and sector to autonomously form their own federations.

There is absolutely no evidence indicating that the collective action on the part of the crane operators had any connection with the ‘national civil resonance’ advocated by overseas democracy activists. In fact, the opposite is the case: just as that event failed to gain much traction, the protests by crane operators appeared all the more remarkable and successful.

It can be said that in contemporary China’s social transition, the democracy movement (referring to the narrow opposition political movements that aim to change China’s political system) should perhaps take a leaf from the book of the labor rights movement. The current stage of the labor movement of course focuses on increasing its economic benefits, and this is the primary reason that they’re able to mobilize and unite a sufficient number of workers and thus gain some small victories, or at least be able to retreat largely unscathed. The political quality and value of the labor movement requires only that individuals with perspicacious judgement look beneath the surface, make their own inferences, and carry it forward.

 
Wang JiangsongWang Jiangsong (王江松) is a labor scholar in China. 

 


Also by Wang Jiangsong:

A Six-day Strike in Shanghai Caused by a $110 Pay Cut – Collective Action by Sanitation Workers in China’s ‘New Era’ of Stability Maintenance, April 13, 2018.

 

 

 

 

Xi Jinping’s Abolition of the Term Limit Ruptures Assumptions of Party’s Adaptability and Stability

Mo Zhixu, February 27, 2018

 

On February 26, China’s official news agency Xinhua published the Chinese Communist Party Central Committee’s Proposed Amendments to China’s constitution (Chinese). The Party proposed revising the clause “The term of office of the Chairman (国家主席) and Vice-Chairman of the People’s Republic of China is the same as that of the National People’s Congress, and they shall serve no more than two consecutive terms” to “The term of office of the Chairman and Vice-Chairman of the People’s Republic of China is the same as that of the National People’s Congress.” During the Party’s 19th congress in November, 2017, no one in the new politburo standing committee appeared to be the potential successor of Xi Jinping, as Hu Jintao was to Jiang Zemin, and Xi Jinping was to Hu Jintao. People then already predicted that Xi Jinping would continue to stay in power after his term ends in five years, with the only unknown being: will he follow Deng Xiaoping’s example to hold onto power as the chairman of the Central Military Committee or/and the general secretary of the Party (the two positions have no term limit), or will he amend the constitutional term limit on the term of the chairman so that he will also keep the nominal position of the chairman?

Even though the proposed removal of term limit is only the dropping of the other shoe, it caused a huge stir. Since yesterday, one can sense a certain desperation in every chat group on WeChat; searches for “yi-min” (immigration) spiked, and people have been discussing which countries they can flee to.

There are complex reasons why such a constitutional change has jolted Chinese society, the most fundamental being that the two-term limit enshrined in the current Constitution, which was amended in 1982, is the political and economic mental setup of the Deng Xiaoping era. To dismantle it is to hit the reset button for a new era.

The two-term cap in the 1982 constitution was a result of Chinese leadership’s painful re-evaluation of the Cultural Revolution: a supreme leader who had life tenure had enough time to elevate his power to be worshiped by all others, and he had absolute power over the lives and deaths of others. Those who paid the highest price were the ones who once had occupied high positions. Abolishing life tenure and replacing it with a limited term would prevent the emergence of the likes of Mao. It was, in the first place, a self-protection measure for those in high power.

In practice, however, the term limit and the institution of collective leadership had a greater effect: to effectively curb the power of the number one leader. As China shifted its focus to economic development, China has been able to give a pragmatic or even reasonable appearance in its governance, even though the regime has remained a dictatorship. To political scientists who have observed China closely, such as professors Andrew Nathan and David Shambaugh, this appearance was an indication of the regime’s “resilience.”

Such an appearance has afforded average people an optimistic outlook of China’s future, while ensuring that foreign capital could trust the system. These have been the psychological fundamentals of China’s rapid economic growth over the past decades.

In China’s liberal discourse, the two-term cap has been regarded as a landmark of political reform, a manifestation of the Chinese communist party’s self-reinvention.

For a long time now, China’s emerging middle class has wanted to pursue change but has been equally scared of chaos: that is, they’re dissatisfied with China’s autocratic polity and hope that it reforms, yet simultaneously, as beneficiaries of the current arrangements they’re opposed to radical change. Their vested interests guide their psychological orientations, and make them more inclined to advocate gradual reform. To a great degree, China’s rapid social and economic development and transformation has taken place under remarkably stable political conditions. Aside from credit earned through the so-called ‘performance legitimacy,’ the CCP’s ability to adapt and reform has been widely accepted, and is a bedrock assumption of China’s political stability.

Gradual Reform — Gone With the Wind

For these reasons, the abolishment of the term limit, while first threatening those in power, strikes the strongest blow against the faith in China’s economic and political system. This is because for the last few years, Xi Jinping’s power has swollen enormously, vitiating the public’s belief in the basic rationality of communist rule. The cancellation of the term limit is the straw that will break the camel’s back: now, the leadership has returned to strongman rule and there are no limits to his power, and thus the appearance that it is a fundamentally pragmatic regime has also been crushed.

The explosion in people searching the phrase “immigration” is a perfect example of the psychological trauma of the latest news. The post-1989 period already saw a severe challenge to the narrative of Communist Party self-reform and adaptation; now, that narrative seems based merely on the reforms of the 1980s, and in particular the 1982 constitutional amendment which saw term limit implemented for state leadership posts.

Since he came to power, Xi Jinping has increased the suppression and control of society, and prospects of gradual reform are simply no longer on the table. The abolition of the term limit system would completely tear away the basis for claims about the CCP’s adaptability, and has turned all hopes for gradual reform based on this argument into a joke. This is equivalent to a death penalty for gradual reform, about as effective as the emergency cabinet established at the end of the Qing Dynasty to deal with the Xinhai Revolution.

Over the last few years, many people unhappy with Xi’s rule had pegged their hopes on Xi being disabled in a (fictitious) power struggle; while others had resigned themselves to wait until 2022 when he would hand over power. But Xi’s consolidation of power at the 19th Party Congress destroyed the former wish, and the elimination of term limit has burst the bubble of the latter.

Xi Jinping’s power and the political line he has pursued will now continue indefinitely. But more importantly, the basic assumptions about China’s politics and economy, about the future of Xi Jinping, and about the prospects of reform, have all been punctured by this development. There are now no immediate prospects for change. This is why what was such an unsurprising announcement has led to such universal shock and lamentation.

 

 

Mo ZhixuMo Zhixu (莫之许), pen name of Zhao Hui (赵晖), is a Chinese dissident intellectual and a frequent contributor of Chinese-language publications known for his incisive views of Chinese politics and opposition. He is the co-author of “China at the Tipping Point? Authoritarianism and Contestation” in the January, 2013, issue of Journal of Democracy. He currently lives in Guangzhou.

 

Translated from Chinese by China Change.

 

 


Also by Mo Zhixu on China Change:

In Beijing, Who Is and Isn’t a ‘Low-end Person?’

Why Is Wu Gan ‘The Butcher’ So Important?

China’s Future: Unstable and Unsettled

The Glory and Suffering of Pu Zhiqiang

Crime and Punishment of China’s Rights Lawyers

The Coming Information Totalitarianism in China

 

 

 

 

Under Neo-Totalitarianism, There Is No ‘Civil Society’ in China

Mo Zhixu, February 4, 2018

 

“Rather, reform has been used as a kind of calibrating tool for the system to retain complete control in the political, economic, social, and cultural spheres.”

 

In 1981, Polish president Wojciech Jaruzelski ordered a crackdown on the growing Solidarity movement. Eight years later, under pressure of internal unrest as well as a cultural thaw in the Soviet Union, the Polish Communist government and Solidarity held roundtable talks. On June 4, 1989, free parliamentary elections were held in Poland and the Communists suffered a crushing defeat. Jaruzelski resigned in 1990 and Solidarity leader Lech Wałęsa took his place as president. Poland marked its transition to democracy without shedding a drop of blood.

Poland’s case is unique among the political transitions in the collapse of the Soviet and Eastern European communist bloc. Unlike the Soviet Union, where reform was led primarily by Communist Party bureaucrats and went through a chaotic implementation, or Czechoslovakia, where change came through the sudden mass demonstrations of the Velvet Revolution, Polish democracy emerged as a product of the state coming to an agreement with society.

In the view of political scientist Juan José Linz, this phenomenon has to do with Poland’s unique political and social structure. Unlike other Eastern European countries, Poland was not a  totalitarian system even though it was also a communist country.

After World War II, Poland did not experience agricultural collectivization. Land remained privately owned and private economy had had a significant percentage in agriculture — a strong contrast with events in other Soviet satellite states.

In addition, the traditional influence of the Catholic Church in Poland remained intact through decades of Communist government. In 1978, Karol Józef Wojtyła from the Krakow parish was selected to become Pope John Paul II of the Roman Catholic Church. As the history’s first Polish pope, his nationality played a major role in shaping the social movement in his homeland. Each of Pope John Paul II’s returns to Poland to celebrate Mass was tantamount to a large-scale social mobilization and at the same time a demonstration of the power of civil society.

A few years ago, my friends Jia Jia (贾葭), Murong Xuecun (慕容雪村) and Michael Anti (安替) met with former Polish President Wałęsa and inquired about his country’s experiences in the transition to democracy. To their surprise, Wałęsa stated bluntly, “My friends, the Polish transition can’t be a model for China. We were blessed to have a Polish Pope.” At a loss for words, Anti replied: “God bless Poland!”

The fact that Poland was not a totalitarian state left room for the growth of civil society. Because of it, organizations like Solidarity could arise in Poland and garner widespread support against the Communist regime.

Following China’s market reforms, Chinese citizens gained more personal, economic, social, and cultural autonomy. Mainland Chinese society seemed to have departed from the familiar dictatorial style, giving many hope that civil society would appear in China and form a local version of the Solidarity movement that would bring peaceful democratic change.

Until a few years ago, this prospect didn’t seem too far-fetched. Limited marketization did bring a handful factors favorable to the growth of civil society, such as the emergence of new social classes, market-oriented media outlets, the establishment of judicial institutions that have the appearance of rule of law, and the growing space for expression on internet. These developments resulted in the spread of the ideas of universal freedom and civil rights, the rise of rights defense activities, and the willingness of participation of the the emerging social classes. People were encouraged by these phenomenon and began to harbor an optimistic picture that the growth of civil society would be tolerated by the regime, that a healthy interaction would develop between the government and the civil society, and that China could thus transition toward democracy.

This optimistic vision was quickly shattered.

After some initial observation, the authorities tightened control over all of these rising social fields: the media and internet were brought under ever-stricter control; human rights defenders and NGOs also faced mounting pressure. Furthermore, the government has been strengthening its grip on the new social classes by establishing party cells in what it calls “the new economic organizations and the new social organizations.”

Some might think these measures are only a product of Chinese leaders’ regimented political mindset, and their optimistic vision is still viable as long as the leaders of the regime change their way of thinking.

But upon closer examination of contemporary China’s political and social structure, you will see that the problem lies not in the mindset of the leadership, but is deeply built into the system.

China’s reform toward marketization has also been called a marginal revolution. This revolution developed as agrarian land was contracted to households, individuals were allowed to create their own businesses, enterprises cropped up in towns and villages, and special economic zones were established in coastal cities. The authorities adjusted accordingly, fuelling the hope that such reforms would eventually make inroads to systemic change, or the most difficult “deep water of reform.”

But in practice, little change has been effected on the system. On the contrary, the reforms on the margins have been adapted to reinforce the system. Specifically, the Party, government, and military saw little substantial change; the Party retained control over the core economic departments, strengthening itself through financial avenues — a phenomenon reflected in the fact that the government has grown more in power and resources while the masses have been regressing. In terms of society and culture, the regime’s monopoly has remained strong but at the same time it has introduced some market elements to strengthen itself.

Thus, the economic progress achieved during the marginal reforms reinforced the regime’s financial capacity and allowed it to double down on its control over society. Contrary to what the optimists had envisioned, market reforms have not touched the root of the political system. Rather, reform has been used as a kind of calibrating tool for the system to retain complete control in the political, economic, social, and cultural spheres.

With the system still firmly in control, factors that optimists believed would herald social change never got off the ground, and the gains civil society made were lost. For example, reacting to the demands of the the new social class, market-oriented media outlets developed a liberal trend for a limited period, but because the industry is subject to Party monopoly, they have ultimately bent to the will of the political system. Faced with combined political and economic pressure, the fate of the internet was similar.

The limited market reform in mainland China didn’t relax the political system’s need for absolute control. It’s more apt to see China as a neo-totalitarian regime with characteristics of a market economy — it can by no means be called merely “authoritarian,” as some do. The neo-totalitarianism does afford the Chinese masses a certain degree of personal, economic, and cultural freedom as well as some social space. Yet that social space is tightly controlled by the state and given little potential for free growth.

In the face of the neo-totalitarian regime’s total control and persistent suppression, the prospect that a civil society born of social movements will usher in progressive political transformation seems increasingly distant and elusive. But history continues. In the 1980s, Poland’s non-totalitarian nature permitted democratic transition through state-society negotiation. Other Communist countries made the transition all the same, whether through peaceful mass demonstrations or violent regime change.

No matter the methods, when a totalitarian regime imposes absolute control over society and robs the people of their rights, it does so against popular support. Social progress may be hindered, but the people will continue to resist the system from within. When the window of opportunity presents itself, history will bring change — at once unpredictable yet in hindsight inevitable.

 

Mozhixu

Mo Zhixu (莫之许), pen name of Zhao Hui (赵晖), is a Chinese dissident intellectual and a frequent contributor of Chinese-language publications known for his incisive views of Chinese politics and opposition. He is the co-author of “China at the Tipping Point? Authoritarianism and Contestation” in the January, 2013, issue of Journal of Democracy. He currently lives in Guangzhou.

 

Chinese original  《莫之许:新极权下没有所谓公民社会》

 

 

 


Also by Mo Zhixu on China Change:

In Beijing, Who Is and Isn’t a ‘Low-end Person?’

Why Is Wu Gan ‘The Butcher’ So Important?

China’s Future: Unstable and Unsettled

The Glory and Suffering of Pu Zhiqiang

Crime and Punishment of China’s Rights Lawyers

The Coming Information Totalitarianism in China

 

 

 

Beijing Refugees and the New Displaced Class

Wu Qiang, December 3, 2017

 

Daxin_xinjiancun-south-gate

“Newly-Built Village” (新建村) in Daxin District. Photo: China Daily

 

On November 18, a fire killed 19 people in Jiugong township, in the Daxing District of Beijing. A few days later, the city government launched a mass clearance operation of “low-end people” around the city’s suburban belt. Within a week, probably more than 200,000 of the “migrant low-end population living in Beijing” was evicted from their rental homes or workplaces.

Videos uploaded to social media, and reports by both citizen and mainstream media journalists, show that people living in the migrant worker “shantytowns” — village enclaves within urban areas — have been told that they have only two or three days to disband. The restaurants and factories in these shantytowns face marauding thugs who roam around smashing doors and windows. Their homes are invaded in the middle of the night by uniformed police, or auxiliary police, who kick in their doors and enter without permission, forcing them to evacuate under the threat of violence. The videos show them cold and homeless on the streets of Beijing in the middle of the night. Some pack onto trains taking them back to their home villages, while others look for temporary accommodations in nearby Hebei Province. Some simply linger on Beijing’s streets, refugees within China’s own borders.

The cruel and violent actions of the government have sparked fury and protest on Chinese social media. Some officially-controlled media, those which still retain some compassion, have published articles that offer veiled criticism of the Beijing municipal government’s policy. Civil society groups in Beijing, which have been under sustained repression for the last five years, have summoned up extraordinary courage to organize protests and relief. Alumni of Renmin University of China, Beijing intellectuals, and labor groups in China have published open letters of protest, for example.

What is particularly noteworthy is that, apart from the small number of Christian organizations and labor NGOs that reached out to help, some Beijing residents volunteered and organized their own relief networks, providing emergency accommodations, food, and jobs to the displaced. Hundreds of volunteers rolled up their sleeves and got involved, showing that civil society in Beijing, despite being under tremendous political repression, is still resilient and courageous.

Consideration of Political Security Underlies the Fascist Expulsion Campaign

As far back as February 2014, during his first inspection of Beijing, Xi Jinping proposed the idea of “relieving Beijing of its non-capital city functions (“疏解北京的非首都功能”).” In 2015 the State Council passed the “Programme on the Beijing-Tianjin-Hebei Coordinated Development (《京津冀协同发展规划纲要》).” In the same year, Beijing passed the “Beijing Municipal Party Committee and People’s Government’s Opinions on the Implementation of the ‘Program on the Beijing-Tianjin-Hebei Coordinated Development (《中共北京市委北京市人民政府关于贯彻〈京津冀协同发展规划纲要〉的意见》)’” and, in 2017, “Beijing Municipal Overall Development Program (《北京市总体规划》).” This indicated that China’s top leaders had made up their minds that Beijing’s population would be capped at 23 million, and cleaning out “superfluous people” would be a key task for the next two Beijing administrations, in addition to the urgent target of Beijing returning to its so-called “capital city functions.” The officials determined that “demonstrable results” would be reached in 2017. Thus, just as winter 2017 arrived, a suspicious fire in a low-rent apartment building in Daxing District presented the perfect pretext. Beijing municipal authorities, using their executive organs in every district where migrant workers dwell and their shops and factories operate, struck. Using the excuse of “fire safety” and an environmental requirement to convert households from coal to gas (煤转气), they orchestrated a mass mobilization of personnel, bringing in construction equipment accompanied by uniformed officers, directly entering the villages and getting to work expelling residents. That is how the ongoing humanitarian tragedy in Beijing was created.

The mass clearance is occurring shortly after Cai Qi (蔡奇), an associate of Xi Jinping, ascended to the office of Beijing Party Secretary around the 19th Party Congress in October. To be sure, it has been common for local Party cadres to kick into radicalist governance as a means of accumulating political merit and showing their loyalty to the top. Similar things took place during the G20 in Hangzhou (杭州), with a massive urban redevelopment plan that came with restrictions on city operations and vehicles, or in Xiamen (厦门), prior to the BRICS summit, where city officials took up a scorched earth policy for stability maintenance. Officials in Lijiang, Yunnan (云南丽江), forcibly shut down guest houses when the occasion called for it, and Shenzhen (深圳) officials have suddenly banned electric-powered scooters.

But there is more to what’s happening in Beijing now, in addition to scoring political points and realizing the central government’s desire to turn Beijing into a show-case city like Pyongyang. Defining why Beijing is undergoing urban redevelopment in People’s Daily in August, Cai Qi stated clearly that “political security” is the number one security issue in Beijing and is part of the national security.  

 

Beijing expulsion_端传媒.png

Areas of mass clearance in Beijing. According to Beijing municipal government, by 2020, Beijing will reduce its population by two million. The mass expulsion of “low-end population” has only just begun. Credit: Initium Media

 

A New Displaced Class

The difference between the current actions and the “arrest and control” of public intellectuals, dissidents, and NGO workers during the 2011 “Jasmine Revolution” in Beijing, is that Cai Qi’s target this time is a massive group of people. These are the “new displaced class,” the main target of expulsion in Daxing District and now in virtually all districts of Beijing. This group includes clothing manufacturers, small factory owners, home renovation laborers, others in the service industry, individual business owners, Taobao store owners, and other small business enterprises and self-employed workers. They — along with the construction workers now holed up under tents on work sites, as well as the contract and lease workers (派遣工) now sleeping in factories — all constitute a massive, growing group, a new displaced class. Their common characteristic is the lack of a stable and long-term employment relationship. They also lack social security or real estate. Compared to the mainstream class in society, they live on the margins of China’s urban environment. Ten years ago, the main representative of this group was the “migrant worker” (农民工), but with the rapid growth of urbanization and movements of people — in particular the relentless expansion of temporary employment relationships, the collapse of the social security system and the shrinking rights of city residents — this group continues to grow. They have now spread to the so-called low-skilled computer programming (码农) and traditional industrial workers.

Guy Standing of the School of Oriental and African Studies at the University of London took note of this phenomenon in 2011. He discovered that the globalization of capital was creating a larger and larger displaced proletariat, from developing countries to the developed world. Their employment is unstable, their work hours are not set, their pay is not fixed, and their scale is massive — from the lowest-rung of work to traditional blue and white collar work. They include both “leased workers” in factory workshops and white collar working positions. They’ve become “The Precariat: The New Dangerous Class,” as Standing titled his book, a new source of social inequality and unease.

The first “displaced class” to arise in reform-era China were migrant workers and entrepreneurs who moved to cities. Today the faces of the displaced class have changed a little, but they’re all a part of the “new displaced class” in the backdrop of globalization. This is not an exclusively Chinese phenomenon, but it’s a trend that has deepened and expanded as China has globalized. This group has uncertain work, a lack of rights, informal contracts, no social security, unstable family environments, and exists outside the social mainstream. This description of the “precariat,” in fact, can be traced back to the Communist Manifesto of Karl Marx and Friedrich Engels 170 years ago.

The growing competition among the bourgeois, and the resulting commercial crises, make the wages of the workers ever more fluctuating. The unceasing improvement of machinery, ever more rapidly developing, makes their livelihood more and more precarious; the collisions between individual workmen and individual bourgeois take more and more the character of collisions between two classes.

The unstable work and compensation of the newly displaced are creating a new form of inequality and insecurity, and also new forms of marginalization that they are unable to overcome. They may end up the objects of resentment due to wave after wave of “evictions,” whether scorned by city residents, or the nation as a whole. Put another way, the reason they are helpless in the face of expulsion is not because they suffer the feeling of inferiority of the so-called lower class. Strictly speaking, they are different from the lowest class. But, it is their lack of security and civil rights that makes them helpless in the face of violence. This is why the danger of the newly displaced is different in the eyes of the authorities from the Jasmine Revolution in 2011 although the group is big, living in close spaces and has the appearance of potential political confrontation.   

 

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Police guard a street where residents and shop owners have been forcibly evicted within 24 hours of notice. Phone: online

 

Beijing: a City Gearing up for the ‘Beautiful Life’  

Daxing District is located in the new Beijing airport’s “economic zone” (临空经济区) and is crowded because of its economic opportunities. So the evictions have been the most violent there. These shantytowns burn coal through the winter and create pollution, leading to frequent fires. They also lack law enforcement. “Zhejiang village (浙江村)” in Dahongmen has a high concentration of clothing manufacturers, logistics companies, repair workshops and houses large numbers of the newly displaced class. But such areas also frequently turn into places with appalling Kowloon-Walled-City-style living conditions; they are seen as a cancer on the outskirts of the city; and they provoke the authorities “sense of security.” They have become a sacrificial offering to the “beautiful life (美好生活)” policy unrolled at the 19th Party Congress. The existence of this class is incompatible with the “beautiful life” designated by the powers that be.

In addition, as the rising middle class has grown, so have internet industries such as courier and online sales services, changing the traditional urban landscape. Streets are filled with couriers, delivery trucks, and countless shared bikes. The expansion and instability of the new middle class has itself impacted many traditionally high-salaried industries and groups, including computer programmers and financial workers. Their temporary accommodations and shared housing arrangements also go against the notion of a “beautiful life” envisioned by the authorities.

By identifying the undesirable class of floating proletarian migrants and analyzing the Beijing government’s policy to “cleanse and reduce the low-end population,” we are bringing the state of this “non-citizenship” to the attention of the public and the international community. In Beijing and the rest of the country, this new and growing class of floating migrants who are “long-term temporary workers” is quietly altering China’s social class structure and urban landscape. They lack basic civil rights and the right of free movement into cities. Their unstable labor relations — that is, the obstacles caused by the backwardness of Chinese labor conditions and social security net — inform their unstable lifestyle that in itself poses a challenge to the urban space. Matters of household registration (户籍) aside, it is possible that this group of people will be used as an excuse for future discrimination and stratification by the state. This kind of stratification no longer entails the classic distinction between the modes of education and residence that once formed the gulf between proletariat and bourgeoisie.

In practice, recent years have seen Beijing’s poor move away from the old city quarters to the suburban districts at an accelerating rate as they search for economical housing, engendering a localized kind of class stratification.

A Genuinely ‘Dangerous Class,’ Perhaps

Placing ourselves in the aftermath of the 19th Party Congress, the net result of the authorities’ utopian designs for “a beautiful life (美好生活)” and hardline radical governance is a new kind of internal colonialism. Walls to maintain financial stability and to spatially isolate the new displaced class are being erected so as to guarantee what Cai Qi (蔡奇) calls “political security.” It is a reversal of the continuous breaking of social barriers during the 30-some years of reforms and opening up.

At the Davos World Economic Forum at the beginning of the year, China projected itself as the greatest proponent of globalization. Its arbiters are clearly taking a page from the statecraft of Li Hongzhang (李鸿章), a general and a diplomat of the late Qing Dynasty, whose Huai Army employed a fortress tactic to overcome the Nian rebels. In the same vein, firewalls are being erected everywhere. The tactic is being elevated to overall strategy: not only has the concept of internet sovereignty received heavy promotion; the “One Belt, One Road” is threatening to divide Europe. Meanwhile, in the United Nations, China has started proactively undermining the universal concept of human rights.

In the future, as Slavoj Žižek said in 2012, “to be exploited for the sake of holding of a long-term job is becoming a kind of privilege.” In the future, perhaps the only people allowed to live and work in Beijing will be elites and members of the new privileged class who accumulate a sufficient score in the new “social accreditation system.” Maybe there will be no more need for the display of state violence in the streets, which would be superseded by symbolic, big-data violence. This would be enough to ignite the increasingly intense class and spatial conflicts between the new displaced class and the mainstream class, creating human rights crises over and over again.

More Beijing refugees will likely be produced as a result of internal colonialism. At the same time, this new displaced class, in the course of repeated expulsions, could in theory find their self-consciousness and engage in independent societal grouping—becoming a genuinely “dangerous class.”

 

 

Dr. Wu Qiang (吴强) holds a Ph.D. in political science from the University of Duisburg-Essen in Germany. He is a researcher of social movements and a freelance writer.

 


Also by Wu Qiang:

Liu Xiaobo: The Founder of China’s Political Opposition Movements, Wu Qiang, June 30, 2017.

 

 

 

 

Thousands of Migrant Workers in Beijing Forcibly Evicted, Resistance Mounted in at Least One Location

China Change, November 29, 2017

 

Picun, map

A map showing sites of forced eviction over the last few days. Credit: FT Chinese

 

On November 18, 2017, a huge fire broke out in Xinjian Village, Daxing County, in the Beijing suburbs, killing 19 people. Subsequently the Beijing municipal government launched a large-scale campaign known as “big investigation, big clean-up, and big rectification of hidden safety trouble,” issuing eviction orders that forced thousands of migrant workers to leave their residences in the freezing night. In official documents, they are referred to as the “low-end population.”

While the exact number is hard to estimate at this point, the eviction map suggests that the number is likely to be in tens of thousands.

Men, women, old and young migrant workers left Beijing in haste, dragging as many of their belongings as they could out of their shabby residences in villages outside of the Fifth Ring Road on the border of the city and leaving behind what they couldn’t carry. It was a mess, and many described the scene as a “disaster movie.” The majority of migrant workers who lived at the junction of the city and countryside worked in urban service industries, including construction workers, electricians, technical workers, security guards, express mail carriers, janitors, housemaids, nannies, restaurant owners, and street vendors. Their work guarantees the effective function of the city.

Many of them have lived and worked in Beijing for many years. Beijing has become their home. They have no other place they can call home or go back to anymore.

According to a blogger, a taxi driver reported that, in Malianwa, Haidian District (海淀区马连洼), he had seen three people hang themselves.

 

Picun welcomes you

Picun (皮村). Photo: Caixin

 

Located outside of the Fifth Ring Road in Chaoyang District, Beijing, Picun village (皮村) is a well-known area inhabited by migrant workers. As it is close to Capital Airport and there were plenty of employment opportunities, it had become a relatively large, and at its peak more than 30,000 migrant workers lived there.

Since 2002, a music teacher named Sun Heng (孙恒) and others founded a non-profit organization in Picun Village called “Home of Fellow Workers.” An elementary school, workers’ university, and a library were also opened. In April of this year, a story entitled “I Am Fan Yusu” based on the personal experience of and written by Ms. Fan Yusu, member of Picun Village Literary Group and a villager of Hubei Province who worked as a nanny, put Picun Village under an unprecedented spotlight (here and here).

Picun notice

Amazing how a piece of flimsy paper can send so many people out into misery. It speaks volumes about the cruelty and arrogance of the CCP regime.

On November 27, 2017, migrant workers in Picun Village received a notice that stated that they “must vacate before 6 p.m. on the same evening.”

As a migrant worker community with a certain degree of  maturity and some ability to organize, the local NGO notified the media and citizens from all walks of life to pay attention to the forced-demolition notice after it had been posted, resulting in the postponement of the forced demolition to what was believed to be Friday, December 1 .

A reporter from Agence France Presse said that on Tuesday two reporters from the Chinese online news outlet “The Paper,” who conducted interviews at Picun Village, were pepper sprayed. But on Monday, when an AFP crew filmed people posting eviction notice, the dozen or so police officers watched on without interference.

This means that the police force was strengthened on Tuesday and that they had received new orders.

In December of last year the authorities cracked down on the NGOs of Picun’s migrant workers, forcing “Home of Fellow Workers,” a local NGO, to close.

Dr. Xu Zhiyong, a founder of the New Citizens Movement who had recently been released from prison Tweeted: “It is just like in those days when we made visits to black jails. Dark forces are afraid of sunlight. So the best way to help those targeted by the government this time around is to go to the sites of eviction, document them, and post them online.”

Indeed a lot of videos have been posted over social media this week. China Change picked two of them for our readers:

 

‘We are also Chinese. Why treat us like this? ’

Nov. 24, Beijing.

A man: “In 2008, you were welcome in Beijing. But now in 2017, Beijing finds you disgusting and kicks you out. “

Beijing: “Low-end population: “We are also Chinese. Why treat us like this?”

A man: “We are not allowed to live here. I heard that in the past few days, there have been nightly checks at 8 p.m.”

In Beijing, there are more than 21 million permanent residents, of which more than 8 million are residents from outside of the city. Recent eviction campaigns have left the “low-end population” from outside of the city with no place to go.

Ms. Cheng: “What do we think? We are very worried. We are also Chinese. Why treat us like this? We are not foreigners. We are also Chinese. Even if you want us to move, to go back, that’s okay, but you need to give us a couple of days. They don’t give us even one day. Look, grocery stores and supermarkets, it’s empty everywhere. There is no place to buy food.”

Ms. Cheng: “If you don’t move out by the end of the month, they will cut off water and electricity. Actually, he (the landlord) has no choice either. He treats us okay. He said that the higher authorities tell you what to do, you have to do it. Now everyone is looking for housing, but it can’t be found. I looked for housing for a whole day yesterday, but I didn’t find anything. They don’t let you rent. They don’t rent to outsiders. Now the situation is simply that they don’t want outsiders to stay in Beijing.”

(Reporter): As long as you are an outsider, you are not allowed to rent?

Ms. Cheng: “Yes, yes, yes. Most people around me are being driven out. The lease has not expired yet, but they are told to move. Now people everywhere are trying to rent a place in Beijing, but no one can find a place. If you have lived at a place for three days, and they check your ID, and you’re found to be someone from outside of the city, they will tell you to leave.“

(Reporter): “Tell you to leave? Who tells you to leave?”

Ms. Cheng: “Just those city inspectors and neighborhood committee officials. They came here to check. “

(Reporter): “If people like you are told to leave, will they refund your rent?”

Woman in blue coat: “No, they won’t. We spent all our money building the house. I still owe someone more than 200,000 yuan ($30,000).  Where can I go? The only place I have is here until I die.”

 

 

The Youth of Picun Village

Hi everyone:

I am Xiao Hai (小海) from Poems and Songs of Laborers. A big fire has affected each and every one of us. Moving, relocation, and eviction have left us with no place to go. Whenever such major accidents happen, we see tremendous contrast between the confidence of those who post public notices and the distressed, panicked, helpless, and numb expressions on the faces of fellow workers who are busy moving out. I feel that we, who have existed in these narrow spaces, have kept our silence for too long. We too must make our voice heard. Where on earth can we go? Reality does not happen in grand offices or in conference rooms. Reality happens in crowded places, in the cold wind, in the streets!

Now, together with my fellow workers, I will read a poem called “Let’s Go, Children, with the North Wind of Beijing,” by Ms. Yu Xiuhua (余秀华):

Leave the sunshine to tomorrow
Leave it to the high-end people to glorify
Leave the happiness to tomorrow
Leave it to the high-end people
Leave the hope to tomorrow
Leave it to the high-end people

But let despair stay
The despair that is left to stay
Will be high-end despair

We have no place to go
But we are on the territory of the motherland
Wearing thin clothes in the cold
We are on the territory of the motherland
We own nothing at all

The motherland is all we have
The motherland in the Beijing accent
The motherland in dialects
The motherland in office buildings
The motherland in rental rooms
This motherland also belongs to them
To those who post the notices
To those who break the windows
To those who rob us when we are in a plight

Children, you must trust me
We live in a low place
But it is not low-end
You don’t attend aristocratic schools
But it is not low-end
Even though you are in rags
You are still not low-end

The low-end owns the narrow-mindedness of the low-end people
The kind-hearted have the tolerance of the kind-hearted people.

 

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