Perry Anderson on the Specter of China

Posted on Mar 19, 2010

By Perry Anderson

(Page 3)

The rise of the PRC as a great economic, political and military power is a central fact of the age. But it gains no illumination from a vacant notion of modernity, which remains as nebulous at the end of When China Rules the World as it was at the beginning. It would not be too unfair to say that what the book at bottom represents is a belated meeting of Yesterday’s Marxism with Asian Values. For beyond a general insistence on the ethical continuities of Confucianism, of which Chinese Communism is viewed as a lineal heir, it says remarkably little about contemporary Chinese society itself. A few cursory lines noting that inequality has been growing, but the government is now acting to redress it; a bit more on the shortage of natural resources and environmental problems; a clipped paragraph on the Party; some prudent reflections on trouble in the border regions; and a firm assurance that the country is not ready for democracy, so it would be best if the CCP could rule undisturbed for another 30 years: this is more or less all the reader curious to learn about the actual social landscape of the PRC could gather from it. Certainly there is nothing to upset the authorities in Beijing, where reception should be excellent. In 1935, the Webbs entitled their book on the USSR Soviet Communism: A New Civilisation?, dropping the question mark in subsequent editions. Today’s ‘civilisation-state’ has been approached in something of the same spirit.

Serious understanding of contemporary China lies elsewhere. Two works of outstanding scholarship, from opposite ends of the political and intellectual spectrum, can be taken as current benchmarks. From the liberal right, Yasheng Huang’s Capitalism with Chinese Characteristics  is a tour de force of empirical inquiry, conceptual clarity and independence of mind. Anyone wanting to know what kind of economy, and what sort of growth, can be found in the PRC should now start here. Huang’s premises could not be more rigidly neoclassical: sound development is delivered by private ownership, secure property rights, financial liberalisation and the systemic deregulation of economic transactions – and these alone. His conclusions, however, are a clear illustration of the truth of Carlo Ginzburg’s observation that a misguided ideology can be a precondition of original research, as well – perhaps as often – as an obstacle to it. By meticulous scrutiny of primary evidence, above all a huge mass of bank documentation tracking loans and their recipients, rather than simply relying on aggregated second-hand statistics, Huang has cut through the clouds of obscurity and confusion that have tended to surround the performance of the Chinese economy in the Reform Era which followed the passing of Mao.

His central finding is that the apparently unbroken rates of high-speed growth have rested on two quite different models of development. In the 1980s, a general liberalisation of financial policy allowed private businesses to flourish in the countryside, many under the misleading sobriquet of ‘township and village enterprises’, as credits flowed to peasant start-ups and rural poverty fell dramatically. Then came the shock of 1989. Thereafter, the state abruptly changed course, choking off credits to rural entrepreneurs, switching loan capital instead into large, rebuilt state-owned enterprises and urban infrastructures, and – not least – granting massive advantages to foreign capital drawn to the big cities. The social consequences of this change, Huang argues, were dramatic. Inequality – not only between village and city-dwellers, but within the urban population itself – soared, as labour’s share of GDP fell, while peasants lost land, rural healthcare and schooling were dismantled, and illiteracy in the countryside actually grew. In a blistering chapter on Shanghai, the showcase of Chinese ‘hyper-modernity’, Huang demonstrates how little average households in the city benefited from its glittering towers and streamlined infrastructures. Amid a ‘forest of grand theft’, officials, developers and foreign executives prospered while private firms were stunted and ordinary families struggled to get by, in ‘the world’s most successful Potemkin metropolis’. Nationwide, in 20 years, officialdom – raking in four successive, double-digit increases in its salaries between 1998 and 2001 alone – has more than doubled in size.

Cautiously, Huang expresses some optimism about the direction of the current Hu-Wen government, as a correction of the worst excesses of the Jiang-Zhu regime of the 1990s, while remarking that its reforms may prove too late to redress the ruin of peasant enterprise, in villages now often emptied by labour migration. But he ends by contrasting the sky-high Gini coefficient of today’s PRC with the relative equity that marked the high-speed growth in the rest of East Asia – Japan, South Korea and Taiwan – and the far greater role in China of foreign and state enterprises, and the lesser weight of the domestic private sector, in the country’s growth model. One consequence, he maintains, is that productivity gains have been declining since the mid-1990s. For Huang, the lesson is straightforward: efficiency and equity always depend on free markets, which in China remain half-strangled. Capitalism there certainly is, but a variety deformed by a corrupt and self-aggrandising state, which in denying its people liberty to manage their own economic affairs has failed to create reasonable conditions of fairness or welfare. The prescription is simplistic, as a glance at the United States could have told any scholar at MIT like Huang. Since the 1980s, financial liberalisation and cast-iron property rights have not delivered much social equity to Americans. But the indictment, set out with exemplary care and lucidity, is unnegotiable. So too is the anger behind it, at callousness and injustice. Not many economists would think to dedicate their work, as Capitalism with Chinese Characteristics  does, to a couple of imprisoned villagers and an executed housewife.

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