China: miracle and misery

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Last month David Cameron visited China in an effort to encourage trade with Britain, but barely mentioned the touchy issue of human rights. Hsiao-Hung Pai analyses the "miracle" of Chinese economic growth and the human suffering that underpins it.

Last month a huge British trade delegation led by David Cameron and four of his cabinet ministers, all wearing their Remembrance Day poppies, went on their Journey to the East to promote British business interests and sign trade deals for British capitalists.

The event was seen as a success by British corporations, which are eager to "take part in China's future development" (decoded: take advantage of China's cheap labour and huge market). In Beijing, within two days, a $1.2 billion contract for Rolls-Royce to supply jet engines to China Eastern Airlines and a £45 million contract to export breeding boars were signed.

Chinese artist Ai Weiwei, among others, urged Cameron to put human rights before trade. Rumours say that Cameron talked in private to Chinese premier Wen Jiabao about writer and professor Liu Xiaobo's imprisonment. But Cameron won't give specifics.

Liu is the co-author of Charter 08, a manifesto signed by over 300 Chinese people demanding human rights. He was given an 11-year prison sentence in December 2009. Charter 08 calls for changes such as an independent legal system, freedom of association, the end of one-party rule and rural-urban equality. Liu's wife Xia is under house arrest and his two brothers are not sure whether they will be able to leave China. Following the awarding of the Nobel prize to Liu, the Chinese authorities set out to intimidate and crack down on those involved in drafting the charter. Given all this, Cameron said he'd made enough of a gesture to the Chinese government by mentioning the words "democracy" and "freedom" when he addressed students at Beijing University.

Then the good Tory quickly got back to business: Cameron urged the Chinese to open up their economy even further and to double British trade with China over the next five years. "The Chinese authorities should be rewarded for pushing forward with reforms to its domestic economy," he said. "If China is prepared to pursue further opening of its markets and to work with Britain and the other G20 countries to rebalance the world economy...that will go a long way towards helping the global economy lock in the stability it needs for strong and sustainable growth." Cameron also said that he would be prepared to lobby on China's behalf for preferred status within the EU "if it further opened its borders to trade with British and continental European companies".

Displacement of millions

Right from the beginning of the slump we have heard politicians in the West talk about the "miracle" Chinese economy that will relieve the world economy from its crisis. As David Miliband said at the time, "After 1989, capitalism saved China. After 2009, China saved capitalism." (If your only index is China's official growth figures, then it sure is a "miracle".) In reality, this "miracle" was built in the biggest factory of the world and upon the displacement of millions of people as a result of the past three decades' economic liberalisation.

Cameron praised the ethos and outcome of the "gaige kaifang" economic reforms and opening up which have emerged since Deng Xiao Ping. He wants to see more free trade, more privatisation of state industries and services, more power to the corporations, an even bigger gap between rich and poor and yet more poverty and social exclusion for the vast majority of China's working class. China's entry into the World Trade Organisation has deepened this process, making domestic agricultural products unable to compete and pushing peasants to leave the land to seek work in the cities. They become part of China's mobile proletariat - with no rights and no status.

Cameron talked of "fighting protectionism", and along the same lines, fearing protectionism in China's major export markets, Chinese president Hu Jintao said on the eve of the G20 talks in Seoul, "G20 members should oppose all forms of protectionism and further eliminate policies and measures blocking free trade and investment, nurturing new growth areas as economic globalisation proceeds."

Cameron's concern about the Chinese policy of undervaluing its currency was the dominant theme at the G20. For China, a high-growth economy based on foreign investment and low-cost, export-led manufacturing, a significant revaluation of its exchange rate will mean lowering exports and prompting job losses. The political consequences of mass unemployment - rather than unemployment itself - are the biggest fears for the Chinese ruling class.

The sustainability test for the Chinese economy lies in the living standards and working conditions of those who keep the economy going. Its sustainability was called into question particularly during the wave of migrant workers' strikes this summer.

In fact, workers have already felt the impact of the crisis. In the south, the heartland of the special economic zone low-wage economy, the painful process of job losses began in 2007, when hundreds of firms went bust and the first wave of migrant workers left to return to the countryside. The speed of the lay-offs increased in 2008 when tens of thousands of small and medium-sized companies closed down, putting millions out of work without notice or redundancy - many even without pay.

By spring 2009 more than 25 million migrant workers found themselves without a job. In summer 2009 lay-offs and bankruptcies continued in Guangzhou, Dongguan and elsewhere in the Pearl River Delta region. While the government started to talk of economic recovery in April 2009, the reality, all over the region, was that factories continued to lay workers off and working conditions deteriorated. Many migrant workers who went back to the cities had to accept worse terms.

Workers experience the effects of inflation daily as food prices continue to go up. Since October 2008 consumer prices have risen 3.6 percent each year. Food prices have risen by more than 6 percent. This affects the lowest income group: migrant workers. A group of Sichuanese workers say they have been earning less in the south since early 2009. "But despite the wage decline, food prices continue to rise," said one of them. "Vegetables, meat and rice are all getting more expensive to buy. Vegetables used to be 8 mao [7 pence] per catty [500 grams]. Now it's risen to 3 yuan [28 pence] per catty."

Early last year a 4 trillion yuan (£373.3 billion) government stimulus package was launched, followed by a flood of bank loans totalling 7.1 trillion yuan (£662.6 billion) in order to drive the recovery by encouraging domestic consumption and boosting growth rates. But Wen Jiabao did not tell us that little of this stimulus package is allocated to public services, housing and healthcare, all of which are central to increasing living standards for the impoverished rural majority.

One of the demands of Charter 08 is rural-urban equality, which goes to the heart of the injustice in China's society and requires fundamental changes. The ruling class knows this - and dreads it. Over the past few years the causes of the rural-urban movement of labour - poverty in rural life, the collapse of job security, mass unemployment and rapidly falling living standards - are being exacerbated by the economic downturn. The discontent of workers, particularly migrant workers, has been evident. The frequency of protests and road blockages has increased, with labour disputes doubling since 2008. For the ruling class, Charter 08 - published in December 2008 - was, at least, bad timing.

Blind

Members of Britain's Chinese business community are blind to what goes on in China. They celebrate Cameron's trade delegation to China and see it as an important step towards promoting British exports as well as investment from China to Britain. Christine Lee, a leading member of London's Chinese business community, said that this represents a great opportunity for small and medium-sized enterprises and will be "a win-win situation for both sides":

"Many British enterprises are affected by the economic crisis and are looking for investment partners... Many Chinese enterprises are taking the opportunity and using the advantage of the exchange rate, and they are buying off or merging with foreign enterprises, to increase the value of their products at home... Many Chinese enterprises have come to Britain to invest...and they are extremely interested in what they can find in Britain and the rest of the EU... Britain's current export to China is only £7.7 billion - there's a lot more room to develop... Many have seen the potential of China's market... Small and medium enterprises overseas will help Britain towards recovery."

Not surprisingly, investors are the privileged few within the coalition government's draconian immigration policies. In order to attract investment, a £1 million investor is eligible for permanent residency in Britain. Big investors are exempt from any immigration cap.

At the other end of Cameron's immigration scale are the working class Chinese parents who leave home and migrate to work in Britain's low-wage economy. Many of them have ended up in detention indefinitely. One of these long-term detainees has been moved between removal centres for two and a half years. "The British authorities want to deport me by any means necessary - even when China doesn't want to take me back," he said. "I've been working and contributing my labour to this country. I don't deserve to be locked up for years. I deserve basic human rights."

Back in China many workers also feel that the system is denying them their humanity. Some have lost hope and protested in the most tragic way - as seen in the recent series of suicides of young migrant workers in Guangdong. Since then a wave of strikes broke out this summer in large factories in southern China. Some of the workers' actions have won them improvements in conditions.

This July the Guangdong authorities proudly announced the launch of a scoring system for migrant workers as a way to "reform" the unpopular hukou (population registration) system that has denied migrant workers their basic rights. Under this scoring system, which resembles Britain's points-based system, migrant workers will have to get 60 points in order to apply for registration as a citizen in a city. These points are awarded depending on your skill level, education and how often you've donated blood! In Guangzhou they will have to accumulate 85 points.

Such schemes will not make an impact. China's rulers are unwilling to make any changes to better the life of the country's 200 million migrant workers.